Alan Lakein once said that planning is bringing the future into the present so that you can do something about it now. Insuring a home is no different. Home insurance protects one’s house, its structures, and some specific items of value kept in it against future incidents that are likely to lead to damage, theft, or destruction. Also referred to as homeowners insurance, it is a great way to manage or deal with sudden/unexpected occurrences which are possible and cannot be prevented.
General Features of a Home Insurance Policy
Some of the most common specifications that this type of insurance covers include:
– The repairs/replacement of distinct parts of the home’s structure like the roof, the garage, the walls, the ceilings, or even a complete renovation of the entire building if it gets destroyed by unexpected accidents (such as theft, thunderstorms, fire), and not neglect.
– Protection of valuable belongings like artworks, highly significant jewelry, electrical appliances, etc.
– Coverage of some of the extra living costs that you may need after a disastrous occurrence that destroys the house. For example, residing at a temporary location while the property is undergoing repairs.
– Coverage of liabilities caused by you, and/or other included members of your family, to someone else, like the treatment expenses for a person who sustains an injury requiring medical attention while they were on the property.
Types of home insurance
Below is a summary of the eight main types of home insurance policies that are common in most states.
HO-1: this only covers the home’s structure with all the distinct parts listed earlier, with specific incidents that warrant claiming the insurance money for repairs. You will need to read through the company’s policy on all specifications to understand what is being offered to you.
HO-2: This covers personal belongings, the home, and sometimes liabilities as well.
HO-3: This type of policy is one of the most common. It covers the home, specified personal belongings, liability, extra living costs, and even medical care.
HO–4/Renters insurance: This does not cover the home but includes coverage of personal belongings and liability.
HO-5: This covers all the specifications listed under the standard features of the home insurance policy above, except that which you specifically stated otherwise.
HO-6: This type of home insurance is peculiar to condo owners. It covers only areas particularly stated in the contract.
HO–7: this is for owners of mobile homes. It also covers all standard features.
HO-8: the last type of home insurance policy is specially for homeowners whose buildings are ancient or were built a long time ago.
Factors That Determine Home Insurance Rates
In the United States, $101 is the average monthly premium paid for home insurance. But there are several factors that determine the actual cost of each person’s insurance. Some of them are:
- The geographical location
The premium you will be required to pay for a home in an environment that is prone to extreme weather conditions. So that which you will be charged if you live in a less endangered environment will vary significantly, even if it is the same type of home insurance.
- Neighborhood crime rates
If you live in a neighborhood where the crime rate is high, then there is a high tendency that your home might be affected at any point. With the increased risk comes a higher premium charge.
- Condition of the home
The state in which your home is at the time you get the insurance cover also determines how much your insurance company is going to charge you. There would be a consideration around the materials used to build it and how hard it will be to replace them if they got damaged or destroyed. The state might also influence the worth of the house, which is also part of the determinants.
- Fire safety features
What safety measures have you taken to secure your home against a fire outbreak? This assures your home’s insurers that at least there is the hope of minimal damage if there were to be a fire incident.
- The homeowner’s credit score and claims history
Your credit score shows your finances and credit strength and helps the insurance company ascertain whether you will be able to keep up with payments or not. The claims history is for any insurance previously covered and claimed.
The insurance agent will present their quotes and policies. You can see all your options clearly and then make further inquiries about any clause in their policies that you might not understand.
Why You Should Get a Home Insurance
While hoping for the best things in life, we should also be prepared for the worst. Getting suitable home insurance will serve you well in the future, but it can only happen if you act upon this knowledge now.
