Homeowners Insurance

Different companies have different types of base policies, and nearly all companies allow you to customize their insurance to give you insurance that is appropriate for you. Review the offered options and make an informed decision.

For the homeowner, there are many kinds of policies that can provide the right level of protection. Insurance is designed to bring your home and belongings back to the same state they were in before a loss occurred - a concept known as indemnity in the industry.

There are several different types of homeowners policies offered by a wide variety of insurance companies. As a result, not all policies are the same.

Most companies offer homeowners policies on a Replacement Cost Settlement basis - this means that you insure your home to pay for its reconstruction if it is damaged or destroyed. A home's replacement coverage is called "Dwelling" or "Coverage A" on your policy declarations page. Replacement Cost is the amount required to repair or rebuild your home materials of like kind and construction. Extended replacement will provide you with a buffer to account for inflation and cost overruns incurred in the rebuilding of your home - again, different companies treat this differently.

A typical homeowner's policy covers the following:

• Dwelling coverage to rebuild your home to what it was before the loss occurred.
• Coverage for structures in addition to your primary dwelling, such as storage sheds, boathouses, and pools.
• Coverage for your personal property - normally companies provide 50% to 70% of the value of the dwelling, although you can purchase more coverage if you need.
• Coverage for loss of use - this reimburses you for expenses if you can't live in your house, or rent a unit in a multi-family home, after a covered loss occurs.
• Liability exposures, protecting you from lawsuits for injuries that occur on your premises. Many companies will extend this protection to off premises, as well.
• Medical expenses if someone is injured on your property - note this doesn't apply to you or your resident family.

There are 3 main types of policies - HO1, HO2, and HO3 used in home insurance.

• HO1 policies cover against fire and perhaps a few other items.
• HO2 policies cover against a list of from 7 to 14 types of things that can damage your home, depending on the company. Often, water issues such as leaks from the roof and burst pipes are not covered in an HO2.
• HO3 policies cover against all perils, but are subject to company specific exceptions (typically flood, earthquake, sinkhole collapse, intentional acts, and wear and tear, as well as others)
• HO8 policies are less commonly used, and are often employed when a home is very unusual in its contruction (elaborate moldings, for example) that may not be readily replaceable.

Some policies will go beyond these core coverages and provide more extensive ones, such as sewer or sump backup, worker's compensation for occasional employees, lock replacement, identity fraud, and more. Mold damage is generally limited in homeowners policies, so check to be sure about what you are getting.

Policyholders may also purchase coverage for collectible and appraisable personal property - jewelry, fine arts, furs, musical instruments, etc. Pricing for this protection and rules regarding appraisals vary by company.

As an example, to be adequately insured for something such as an engagement ring, though, jewelry should be explicitly covered on a policy. Scheduling a ring normally covers it for nearly all perils, including theft and mysterious disappearance.

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