A homeowner's insurance provides financial shield against any losses that the insured incurs due to disasters that affect the home and the articles contained inside the home. Usually a home insurance policy is a package policy which implies that besides protecting you against monetary losses, the policy also indemnifies you against legal responsibility and any form of liability for injury or damage that you cause to any individual.
Four types of coverage are included in a standard homeowner's insurance policy. These would cover the following components of your house
- Home Structure.
- Belongings and Articles contained in the house.
- Protection against liability.
- Amount incurred for arranging a temporary shelter in case the repair of your house lasts for duration long enough to arrange for alternate accommodation.
A Standard home insurance policy does not provide protection against Flooding and Earthquake. You need to buy supplementary insurance which covers you against such risks. In case your place of stay is vulnerable to floods, you must pay that extra premium to safeguard yourself.
The important question that each home owner needs to find an answer to is for how much amount does he need to get his house insured? Though there is no straight forward answer to this but there a few things that you need in keep in mind while finalizing the coverage amount. The basic tenet which is fundamental to home insurance is that the amount of sum insured should be sufficient to rebuild one's entire property which has been destroyed due to severity of a disaster. This concept is known as 'Replacement Cost'. You must carefully arrive at the replacement cost of your property and must seek the help of an expert in arriving at this value. The sales representative of the insurance company could also share the standard working provided by his organization. The second type of policy which is cheaper compared to the replacement cost policy is known as the 'Cash Value' insurance. This insurance typically covers you for the market value of your property. Remember in times of depressed property market conditions, the market value of your property might be lower than the replacement value.
The other factor that determines how much insurance is adequate is typically determined by the extent of protection and additional risk elements included in the scope of the home insurance policy. Various insurance categories that the home insurance company would recommend you would vary from HO-1 to HO-8 depending upon the technicalities and risks covered. Each HO is a different policy by itself and is designed to cover a specific need of the insured. AN HO-1 is the most common and basic home owner's insurance which covers eleven risks of fire, lightning, windstorms, explosion, riot, theft, vandalism, smoke, and volcanic eruption. It is very obvious that the amount of premium payable varies depending upon your choice amongst HO-1 to HO-8. A home owner's insurance policy can be bought from several sources like local insurance agent, on line or by directly calling the sales representative of the home insurance company.
