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.
Important Factor of 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.