What Is Basic Homeowners Insurance Coverage?
Owning a home comes with a long list of costs, and one of the most important is the purchase of homeowners insurance. A homeowners policy protects the owner and the bank holding the mortgage from loss should the home be damaged or destroyed. In addition to covering the structure, homeowners are protecting their possessions against loss and themselves against certain liability claims.
Other People Are Reading
-
Basic Structure Coverage
-
The fundamental purpose of a homeowners insurance policy is to pay to repair or replace the structure of the home, if it is damaged or destroyed. Policies are written in two different ways that affect this coverage. One policy type is written for the purchase or assessed value of a home and the other is for the full replacement cost of the home. Your policy should insure the replacement cost of the home at the current cost of materials and labor.
Basic Possession Coverage
-
A homeowners policy also covers the possessions inside of your home. The policy will insure the value of your personal property in the event that it is damaged or lost. This coverage is an area in which you should pay special attention if you keep a lot of highly valuable things in your home. The policy will have coverage limits that may not cover your extensive collection of jewelry or computers or baseball card collection. You are required to pay an additional premium to extend coverage to higher limits.
-
Policy Types
-
There are many types of homeowners insurance policies, and you must be sure that the one you purchase provides the coverage you need. The three basic policies, HO1, HO2 and HO3, provide coverage against specifically enumerated damage types. An HO4 policy is for renters only and does not cover the structure. HO6 policies are for owners of condominiums and reflect the unique nature of those structures. There is also a type of policy for older homes where the cost of replacement is significantly higher than the value of the home. This is an HO8 policy.
Specialty Coverage
-
Regular homeowners insurance policies do not cover flood or earthquake damage. If your home is susceptible to damage or destruction by flooding or is in a defined flood plain, you can purchase a rider to the standard policy for this coverage. Earthquake coverage can also be purchased for homes susceptible to damage from these events.
Liability Coverage
-
Homeowners insurance policies include a liability coverage component. This insurance provides payment for property repair or medical expenses and related legal fees if someone is hurt or damaged by you or your family, or even the family dog.
Home Business Coverage
-
Using your home as the base for your business brings special considerations to your homeowners policy. Your business equipment and inventory require additional coverage beyond the limits of a standard policy. You also want coverage for any customer that comes to home in the course of doing business, and this may be beyond the scope of your standard liability coverage.
-
