Home insurance exists so that when you start over from a theft, storm or fire, that you don't have to go into your own pocket to begin all over again.
Home Insurance
When looking for a home insurance policy, it's important that you know home insurance basics so that you can make a well-informed decision in your purchase. Just because you paid $100,000 for your home, to have full replacement on the home in the event of a fire could require that you carry coverage for $170,000. If you bought an existing home, you were willing to take buy the home as-is. If that same home burned to the ground, the insurance is on the hook to rebuild it “brand new”.
Property/Dwelling/Contents—Your basic home insurance policy will cover incidents that occur on the property, to the dwelling and to the personal property/contents.
"Contents" is basically anything that would fall out of your home if you turned it upside down and shook it. In the event of the worst case scenario, such as fire, it is best to keep receipts and video tape of your belongings to have proof of what you own. No one remembers everything they actually own. It would also be best to keep a copy in a different location in the case of a total loss.
Endorsements
There will be a few things that are not going to be covered under the typical home insurance policy. Anything that is not covered on your policy may have the option to be added by “endorsement.” For instance, jewelry, paintings, furs etc. are usually only covered up to a set amount, if at all. To protect any family heirlooms or your wedding ring, you'll need to endorse your policy to ensure that the full amount is covered. Flood insurance is also a separate policy that would need to be purchased through your agent
When Home Insurance is Needed?
If you are buying a home, the mortgage company or bank will usually require you to purchase and pay for the first year’s premium in full before you close and take possession of the home. If you own your house outright (i.e. there is no mortgage on it), you do not have to carry home insurance. However, unless you can afford to replace your home and possessions, it's a great idea to have it!
Basic Homeowners’ Insurance Packages
Here’s a list of the most commonly used standard forms for the various homeowners’ coverages:
· HO-1 is very basic coverage, insuring against fire or lightening damage.
· HO-2, called “broad coverage,” also covers loss of or damage to property resulting from windstorm or hail, theft, explosion, smoke damage from vehicles and aircraft, glass breakage, removal of property endangered by covered peril such as fire, vandalism, malicious mischief, and riot or civil commotion. HO-2 also covers building collapse, freezing of or accidental discharge of water or steam from within plumbing, heating, or air-conditioning, falling objects, weight of snow, ice, or sleet, and rupture or bursting of steam or hot water heating systems.
· HO-3, called the “special” form, insures your home and detached structures against loss or damage from any peril except for those specifically excluded in the policy. This is the policy most homeowners purchase. It is important for you to read your policy carefully to see what is excluded—you may want to cover exclusions with special endorsements.
· HO-4 is a tenant’s policy and insures your household contents and personal belongings against the perils of the HO-2 policy. It also covers additional living expenses if needed, medical payments, and also liability protection.
· HO-6 covers a condominium unit-owner who wishes to insure items not insured by the association policy, as well as the personal property inside the unit and personal liability protection.
· HO-8 is the “older home” policy. Having an older home may preclude your being able to buy a replacement policy; you may have to buy a modified replacement policy instead. This means that instead of replacing such older home materials as plaster walls for example, the policy will pay for standard building materials and processes in use now.
Why does my insurance rate keep changing?
When an insurance company goes through a low claim period, they have more revenue and can offer bigger discounts. During a high claim period, rates often go up. So the idea is to research home insurance at least twice a year to see if there are significant savings at other agencies which is where we can help. Homeowners have saved as much as $1,000 a year on the exact same policy just by researching. Remember you can always save on home insurance.
