Ultimate Homeowners Insurance Guide

Homeowners InsuranceEarthquakes, and floods, and tornados – oh my! No matter how much time we put into taking care of our homes, there are certain emergencies that we cannot predict or account for. Even if you don’t live in an area that is disaster prone, your valuables are still subject to unintentional damage, or even theft. There are ways to protect against these misfortunes, including homeowners insurance, but often we are left with more questions than answers after looking into this option. Here, we’re going to provide you with an overview of what the different types of homeowners insurance options cover, and give you the resources to determine which option is best for you.

Homeowners insurance became popular in the late 1950s, and developed out of a need for insurance companies to have a comprehensive policy that homeowners could buy at-large. Since then, the scope of homeowners insurance has been generally the same. Though there are different types of coverage, 80% of the policies in the United States are based on a form known as the HO-3. This form of homeowners insurance tends to cover the entire house and other structures, with the exception of those designated in the policy – typically earthquakes and floods. Other options, such as the HO-2 and HO-1 cover only damages that are specified in the agreement, while the HO-4 option is for renters, and the HO-6 is the option for condominium owners.

What IS covered by HO-3

Within the standard coverage policy offered by home insurance agencies, these are the instances under which your home/belongings will be repaired or replaced:

  • Fire
  • Lightning
  • Tornadoes
  • Hurricanes
  • Hail
  • Explosions
  • Riots or civil commotion
  • Aircraft
  • Vehicles
  • Smoke
  • Theft/vandalism (sometimes referred to as “malicious mischief”)
  • Snow
  • Falling object
  • Weight of ice
  • Freezing of household systems

One thing to note is that most HO-3 plans cover everything except those specific things that are listed, but be sure to confirm this with your homeowners’ insurance agency. Also, check to see if your policy offers actual cash value for damaged belongings, or actual replacement cost.

Cash value factors in the depreciation of items. So let’s say you paid $400 for a television two years ago, the actual cash value might have depreciated by $200, meaning that the insurance agency will only reimburse you $200.

Actual replacement cost replaces your belongings regardless of what the cost is after depreciation.

What is NOT covered by HO-3

  • Floods
  • Earthquakes

Did you know that about 90% of the U.S. lives in a earthquake-prone area? Also, your home is 26 times more likely to be flooded than to suffer a fire. With these considerations, it might be worth it to invest a bit more into the protection of your home to avoid extreme costs later.

This is a general overview of the nature of homeowners insurance, and will act as guidance for you when considering which type of coverage is best for you and your home. For more about homeowners insurance, be sure to contact your agency.

Comments are closed.

©2014 Contract Carpet One | Privacy Policy

Website design by Groove