Home Insurance, Insurance, Auto Insurance,Health Insurance, health insurance quotes, Insurance Policies    Home Insurance, Insurance, Auto Insurance,Health Insurance, health insurance quotes, Insurance Policies 
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Home Insurance Basics

Home > Insurance > Home Insurance Basics

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Home insurance is all about two crucial concerns protection and price.

The proper home insurance coverage means buying the right kind of policy, having the proper levels of protection within that policy including special provisions for jewelry, your computers, and other valuable possessions and supplementing this coverage with special protection against natural disasters that are not covered in your basic policy.

Usually, lenders require homeowners with mortgages to have home insurance. Many people mistakenly think that the policy terms required by their lenders constitute suitable levels of insurance. Lenders will ensure that their exposure is covered, but that can be done without your being fully protected! Thus, it's important for you to calculate your needs as well and make sure they are reflected in your coverage.

Seven basic policies

There are seven basic types of home insurance policies and they are pretty much the same regardless of where you live (except for Texas). They are mostly defined by the perils they cover:

HO-1. Basic homeowners
Covers your dwelling and personal property against losses from 11 types of perils: fire or lightning; windstorm or hail; explosion; aircraft; riot or civil commotion; vehicles; smoke; theft; vandalism or malicious mischief; damage by glass or safety glazing material that is part of a building; and volcanic eruption.

HO-2. Basic homeowners plus
overs dwelling and personal property against 11 perils plus 6 more: falling objects; weight of ice, snow or sleet; three categories of water-related damage from home utilities or appliances; and electrical surge damage.

HO-3. Extended or special homeowners
Covers 17 stated perils plus any other peril not specified in your policy, except for war, nuclear accident, flood and earthquake.

HO-4. Renters coverage
Covers just personal property from 17 listed perils.

HO-5. All risk coverage for building and personal property
This policy form isn't sold much these days.

HO-6. Condominium coverage
Covers personal property from 17 listed perils along with certain building items in which the unit owner might have an insurance interest.

HO-8. Basic older home
This covers dwelling and personal property from 11 perils. It differs from HO-1 in that it covers repairs or actual cash values not rebuilding costs. This is for homes where some historic or architectural aspects make the home's replacement cost markedly higher than its market value.

There are many variations on these policies as well. For instance, landlords can buy coverage that insures just their dwelling and not your personal property (which is what a renters policy will cover). Also, you can get special policies to cover mobile homes (a.k.a. manufactured housing). Most homes are covered by HO-2 and HO-3 kind of policies.

Starting an application
Home insurance companies research a wide range of personal information including your marital status, current occupation and employment history, previous addresses, date of birth, and Social Security number. Using this information, they will check your insurance, credit and criminal history to see if you are a "good risk".

They also will look at your loss history to see what types of home insurance claims you've made in the past. They'll look into any previous home insurance coverage you may have had, including why you or your insurer canceled that coverage (if it was canceled involuntarily).

They will also want you to choose a type and level of home insurance coverage. They'll want you to pick the dollar amount or percentage deductibles you'd like to have, and the kind of payment schedule to which you'd be agreeable.

Analyzing your home
How much you will pay for homeowners insurance is also determined by your house. Generally, insurance companies want to know everything, from where it is located, to when your home was built, to what your house and roof are made of. They will want to know the square footage and number of rooms. They will then calculate the cost to rebuild it.

They will also want to find out the type of heat, the location on any fuel oil storage tank, and the condition of the home, inside and out, as well as the condition of the foundation. Other home-related statistics include the number of residents, distance from a fire station and fire hydrant, and the area's fire safety rating.

Protection devices such as smoke detectors and deadbolt locks can lower your rates. Extra features, such as the existence of a trampoline or an in-ground pool can raise rates. You will pay more if you are located in a higher risk area, such as a coastline, or if you have a pet that could increase your liability risk, such as certain breeds of dogs. Your insurer will also want to know if you plan to use the home for any business purposes, or if you plan to rent all or part of the house, both of which can increase liability.

Armed with all this information, insurance companies can find out how much to charge you for insurance, sometimes in a matter of minutes. Then it is up to you to decide to accept their offer, make changes to lower your premium, or go off in search of another company.

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