Homeowners Insurance guide

Like life and health insurance, homeowners insurance is also extremely important nowadays because for most of us it takes a whole lifetime to build or purchase a house and maintain it. Homeowners insurance as we all know refers to safeguarding our house and things kept in it against all warranted and unwarranted dangers.


Homeowners insurance is a package policy that covers damage to both property and liability or legal responsibility for any injuries and property damage you or your family cause to other people. This also includes damage due to pets in the house. Though the homeowner's insurance also provides coverage for damage caused by disasters and other natural calamities, yet there are quite a few exceptions to it. In case you desire to cover both, flood and earthquake, purchase two separate policies.


There are different types of homeowners' insurance policies. For instance the policy is different for the owner of a house and for the person who has rented his house. Usually companies categorize their polices under the terms 'standard' and 'deluxe'. However if you have your own house then there are several options open in front of you. The most preferred and popular policy in this case is HO-3. In comparison to all kinds of homeowners' policies the HO-3 policy offers the widest coverage and thus protects your home against all dangers except a few traditionally excluded.


HO-1 or Limited coverage policy for the homeowners is rarely found provides coverage against a set of 10 disasters. The Basic Policy i.e. the HO-2 policy is a protection against 16 disasters while the HO-8 i.e. Older home policy is designed for older homes and reimburses you for damage on actual cash value basis which means replacement cost less depreciation. In case of very old homes full replacement might not be possible.


For those who put their house on rent HO-4 Renter policy is the best of all. This policy safeguards your possessions and all the parts of apartment owned by you against not more than 16 disasters.


The HO-6 policy is devised for people who own a condo or co-op. The policy covers your property and structural parts of the building owned by you against commonly considered 16 disasters.


However an owner as well as a renter can avail three opportunities of coverage. The first is actual cash value policy, which pays to replace your home possessions subtracting the deduction or depreciation. Second level of coverage is the replacement cost where the policy pays the expense of reconstructing your house or belongings with no subtraction of depreciation. The third type is the guaranteed or extended replacement cost policy that reimburses for the expenditure you incur in rebuilding your house that is ruined by fire or any natural calamity. The policy also ensures money if the cost of construction increases after a disaster due to increase in price of raw material. Though the policy will not cover the cost of upgrading the house to fulfill the latest building codes yet additional costs can be met by getting an endorsement to your policy known as Ordinance or Law. Due to the amount of benefits offered, this policy is quite expensive.

By Mansi gupta