Homeownership is an ideal component of the American dream for many people. For many Americans it is their largest investment, their most prized possession. It is important that you take measures to protect what may be your largest economic investment. Sometimes, it is difficult to protect against all unforeseeable risks to your real estate property. Home insurance provides homeowners protection against unforeseen events and helps protect their finances. Homeowners insurance or home insurance offers real home protection through the homeowner insurance policy and gives you peace of mind.
Generally, most home insurance provides the following coverage 1) structure of the home; 2) other related structures including, driveways, sidewalks, garages, and fences, 3) personal belongings, 4) liability protection 5) loss of use or additional living expenses (ALE), such as hotel costs and restaurant meals that results from the damage. The main areas where home insurance policies differ are in the perils they cover and their exclusions. These are various components of standard and optional choices among the following policies:
Basic homeowners policy
Offers home protection against 11 different perils
More expansive than the standard homeowners policy
Protects your home from 17 different perils
Policy premiums are about 5 to 10 percent more than a HO-1 policy
Unique homeowners insurance policy
Offers protection against all perils except perils not included in your policy
Premiums are approximately 10 to 15 percent higher than a HO-1 policy
Renters policy, covers renters
Home protection against 17 different perils, includes liability
Doesn’t insure the home real estate itself
All inclusive home insurance policy
Doesn’t include damage from earthquake, floods, and wars
Policy coverage for co-ops or condominiums
Covers personal property, liability, and specific unit improvements
Usually covers unit structure under the association’s insurance
Insurance policy for older houses
Offers home protection against 11 different perils that includes repair costs or actual cash value not replacement costs
Suited for older homes that have market values less than its rebuilding costs
A homeowner insurance policy places perils into two categories: open perils and named perils. Perils express covered causes of loss.
Open Perils: Accidental overflow of water, Weight of ice/snow/sleet, Falling objects, Bulging, Sudden cracking, Burning, Freezing, etc
Named Perils: Lightening, Smoke, Aircraft, Theft, Vehicles, Fire, Hail, etc
Before you begin your homeowners insurance application process, make sure you are prepared to provide extensive information to the home insurance company. It is important to research the right home insurance company and policy before making a decision to protect one of your largest investments.
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