Home insurance, which is sometimes also known as homeowner’s insurance (or HOI), or hazard insurance, is a type of property insurance which private homeowners can purchase in order to insure their home. These insurance policies generally combine a large number of protections which are important to any homeowner, such as loss of the home, the contents contained within the house, loss of certain other possessions, loss of use regarding the house, and generally some sort of liability insurance for accidents which can occur on the covered property (such as construction accidents).

Generally, home insurance uses a single premium for all of the different coverages it provides, and the cost of this premium depends on the value of the house, property, and any additional objects insured by the policy. This price is also affected by the proximity to things which would make the home in more or less danger, such as being near a fire station lowering the premium, or a volcano raising the premium (this is very important for anyone looking to compare home insurance in some states).

Similar to automotive or health insurance, home insurance is usually a term contract, where the insured buys an insurance policy for a fixed period of time, although perpetual insurance policies are sometimes available. All of this is important to know for anyone who wishes to compare home insurance.

Another factor which is important when you are going to compare home insurance is the ISO standardized insurance forms. The HO1 policy covers a home against the 11 most common perils for a homeowner, such as fire, vehicle-induced damage, or vandalism; floods and earthquakes are generally not covered in HO1 policies. HO2 policies include these 11 perils, plus 6 additional perils, which are all listed by the policy. HO3 policies are called “all risk” policies; flood and earthquakes are still not generally covered, but these policies cover any perils that are not specifically excluded, as opposed to HO1 and HO2 policies which only cover perils that are specifically named.

HO4 is renter’s insurance, which covers the possessions owned by a renter from similar perils. HO5 is a premier homeowner policy which covers the same perils as HO3, but even more is protected at a larger price. HO6 is for condominium owners. Finally, HO8 is a type of insurance for occupants of older homes with a replacement cost that exceeds the property market value.

For most Americans, purchasing a home involves taking out a mortgage. Banks which give out mortgage loans require the prospective homeowner to take out a home insurance policy. Just buying the first home insurance this person comes across would be a terrible decision; with the insurance and housing markets the way they are in this day and age, any informed person would compare home insurance offered by multiple insurance agencies and compare home insurance policies offered by these agencies.

Even for those endowed enough to afford purchasing a house without the hassle of taking out a mortgage from a bank, home insurance is a great idea to protect what is a major investment; these homeowners would still want to compare home insurance to ensure that they get the best deal possible.

If your company goes bankrupt what happens to your Pension?  Will you be left out in the cold?  Will the money you have been counting on for your retirement be gone?  Will you be forced into continuing to work, or even worse, be forced into returning to work after you have already retired?

Safeguards Against Losing Your Pension Plan

Fortunately, it is not as bad as most people think!  There are safeguards in the United States to prevent you from losing your pension plan.  In the United States every defined-benefit retirement plan is insured, at least to a point.  Most will receive all or at least most of their company pension even if your company goes bankrupt.  However, in some cases,  it may not be every penny you expected.   

What Happens When a Company Goes Bankrupt?

When a company goes bankrupt they have two choices.  They can reorganize and try to stay in business by reducing costs and attracting new investors, or they can liquidate.  The pension plan is usually terminated in reorganization and always terminated in liquidation.  So, then what happens?  A federal insurance agency called the Pension Benefit Guaranty Corporation (pbgc.gov), takes over the pension payments.  Only employees with the largest pensions actually take a hit.  The Pension Benefit Guaranty Corporation maximum annual payment, which rises with inflation, is $54,000 this year for workers who retire at age 65.  As with any insurer, the PBGC has some restrictions.  For example, it prorates recent pension increases.  However, in all, 84 percent of retirees get their full pension even after bankruptcy.

A Few Rare Cases Under Reorganization

In a few rare cases of a company bankruptcy reorganization, the employer maintains the its pension plan.  That normally only happens for one of three reasons.

1. The benefit is low
2. Employee turnover is high
3. The pension plan is new

Avoiding Bankruptcy is Better For The Company.

In most cases, however, it is always better for the company to avoid bankruptcy altogether.  In December of last year, Congress gave some help in this direction by relaxing the 2006 Pension Protection Act‘s strict rules governing pension funding.  As counter intuitive as it may seem, this is one move that endangered workers should embrace.  As a result of this move, according to Dallas Salisbury, president of the non-partisan Employee Benefit Research Institute, ” Given the economic downturn, employees are better off than if the company was forced to make a large pension contribution”.  “It’s better to stay in business than make a pension contribution”.

How Does This Affect Me?

I am actually receiving a pension from a large company that is not bankrupt.  I have been asked by many of my friends what will happen if the company I retired from goes under during these difficult times.  Thankfully, as a result of the above protections, I can answer them …  as far as my pension goes … not much!

Protection For Health Care Benefits Are Not The Same!

I wish I could say the same for the medical benefits.  They are not nearly as well protected.   In my last few years of employment, the cost of  health care benefits for retirees, which at one time were an excellent value were increased to the point where it was not affordable to maintain.  I was forced to purchase a private plan to hang in there until age 65 when Medicare kicks in!  It is my single largest monthly expense.  It’s not often you wish you were older but when it comes to health care insurance I can’t wait until I’m 65.  Papa B.