What is Home Insurance?

Most people identify their home as their largest asset. Home insurance provides a way to protect this financial investment.
 
What is home insurance?

Home insurance is a legal agreement between an insurance company and its policyholder. Insurer promises the policyholder financial protection for covered losses associated with owning a home. Policyholder agrees to pay a premium in return for this financial protection.

Homeowners improve their insurance options when they…

- Take care of the property. The homeowner is responsible for routine maintenance and repair – not the insurance company.  Seek assistance/advice from a local housing organization or insurance agent if necessary.

- Prevent losses.  Identify and correct hazards that increase the likelihood of property damage (i.e. replace frayed electrical cords, proper storage of flammable materials) and injury to others (i.e. repair broken steps, clear impassable walkways).

- Show financial responsibility.  Statistics show those with good credit have fewer claims.  In turn they pay less for insurance and have more options.
 
- Property losses covered  by homeowners insurance…
 
Policies vary in the kinds of property losses they cover. Insurers identify “perils,” or causes of loss that describe when property damage is covered.
Covered perils are identified and explained in the homeowners insurance policy.
 
Common homeowners insurance policies…

Insurers combine coverages for dwelling, other on-premise structures, personal property, additional living expense, and liability into one package.
There are different policy packages (called coverage forms) with varying levels of property coverage.
 
Homeowners 2 (Broad Form) and Homeowners 3 (Special Form) are the most common homeowners insurance policy coverage forms.

Some insurers use these generic terms to describe their policies.  Others come up with their own names.
 
Homeowners 2 (Broad Form)

Covers dwelling, other structures, and personal property for losses caused by:

Fire   Lightning  Windstorm
Hail   Explosion  Riot/Civil Commotion
Aircraft  Smoke   Non-owned Vehicle
Vandals  Burglary  Glass Breakage
Robbery and Theft
Volcanic Eruption
Damage from Falling Objects
Weight of ice, snow, sleet
Sudden & accidental tearing apart, cracking, burning or bulging of a steam of hot water heating system
Accidental discharge, leaking or overflow of water or steam from within a plumbing, heating or air conditioning systems or domestic appliances
Sudden & accidental injury from artificially generated currents to electrical appliances, devices, fixtures and wiring.
 
Homeowners 3 (Special Form)
 
Broadens coverage to “open perils” for dwelling and other structures. An “open perils” policy covers all causes of loss except those specifically excluded.
 
Personal property is covered for HO-2 perils.
 
Additional living expense coverage is included.
 
Homeowners insurance provides personal liability coverage too…

In addition to property coverage, the HO2 and HO3 homeowners package policies include personal liability protection and coverage for medical payments to others.

Liability coverage protects you when you, other members of your household, or your pets are legally responsible for injury to others or damage to their property. If necessary, liability coverage will also pay for a lawyer to defend you.

Read more on auto and home insurance: http://www.autoandhomeinsurance.org