Insurance for Everyday Living: Home Insurance

Gaurav Bhola, MSM, Managing Editor

Want to turn a smile upside down, just mention the word insurance to someone. The word insurance sends shudders through people, but sometimes insurance is necessary. As consumer needs have changed over time, so have the products offered by insurance companies. There are many flavors for each type of insurance such as, life insurance, health insurance, car insurance, business insurance, home insurance, travel insurance, disability insurance, medical insurance, and more. It is critical that you get the appropriate insurance quote to protect yourself, your family, your finances, and any business.

If you don’t like insurance, just take it as if you would take bitter tasting medicine, you may not like taking it but it is good for you. The essential insurances to consider are health insurance, disability insurance, life insurance, auto insurance, and home insurance. Today, we cover home insurance.

As a homeowner, it is critical to get home insurance. A basic policy provides you protection against many disasters with an exception of a few. Home insurance also gives you liability protection, in case of any injuries and real estate property damage caused by you or your family to others. Fortunately, the policy includes damage caused by your household pets. Particular damage in special cases requires supplemental home insurance coverage:

Umbrella - gives enhanced liability protection

Flood insurance – inexpensive coverage that covers all damage caused by floods. Any reimbursement for flood damages is not contingent upon being declared a federal disaster area

Earthquake insurance- covers damage due to earthquakes and protects home structure and personal possessions from the earthquake cracking and shaking. A standard policy covers damage from fire and water damage due to burst gas and water pipes

Endorsements – extra coverage for certain items at an extra premium. Endorsements enlarge protection on items such as, computer and camera equipment, stamp or coin collections, jewelry, television and radio satellite antennas and dishes, furs, art, etc.

There are many types of home insurance policies that provide property and liability coverage. These are some common types of home insurance policies:

HO-1 - basic homeowners policy that provides you home protection against 11 different perils

HO-2 – a more expansive homeowners policy which protects against 17 different perils, Premiums are about 5 percent to 10 percent higher than a HO-1 policy

HO-3 - provides you home protection against all perils except perils excluded by your homeowners policy. Premiums are about 10 percent to 15 percent higher than a HO-1 policy.

HO-4 – coverage for renters, a renter’s policy. Protects against 17 different perils, includes liability, No protection for the home itself

HO-5 - comprehensive policy, excludes damage from floods, earthquake, and wars

A homeowner policy categorizes perils into: named perils and open perils. Perils express covered causes of loss.

Named Perils - lightening, aircraft, fire, theft, hail, smoke, vehicles, etc

Open Perils - accidental overflow of water, falling objects, weight of ice/snow/sleet, burning, bulging, freezing, etc sudden cracking

It is important, when beginning the homeowners insurance application process to be prepared to give extensive information to the insurance company. The insurance company performs a thorough evaluation of your personal credit, insurance, criminal, and employment history; as wells, validate your current employment and marital status, among other things. Have your personal information handy when discussing options with the insurance company to make the process of getting a homeowner insurance policy fast and easy.

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