Home Insurance Basics
Homeowner's insurance, also called property insurance, protects you from damages to your:
Together with auto insurance, homeowner's insurance constitute what is called property & casualty insurance. P&C is distinct from life and health insurance. Some insurers offer P&C insurance while others do not. You may find that your current auto insurer is willing to issue you a homeowner's insurance policy.
Like all insurance in the U.S., homeowner's insurance is regulated by state insurance commissions. The umbrella organization is the National Association of Insurance Commissioners (NAIC). The NAIC maintains a directory of state insurance commissions at its Web site.
If you have any questions concerning policy coverage, exclusions or limits, contact the insurance agent or company that sold you the policy or your mortgage lender.
Save your money click here to obtain a free quote of Home Insurance >>
- Dwelling. A dwelling is the structure you live in. For coverage purposes, dwelling also includes any attached garages or units. A basic homeowner's insurance policy may also cover damage to detached structures on your property such as a shed or swimming pool.
- Personal property. Personal property includes furnishings and other belongings that you use, wear or collect. A basic policy insures these items from theft or peril-related damages. However, jewelry and other collectibles often require separate coverage.
- Liability. Liability coverage pays for accidents that occur on your property for which you are held responsible. Liability includes a neighbor being hurt on your property or someone tripping on your child's bike left on the sidewalk.
- Living expenses. In case you have to live elsewhere while your home is being repaired for a claim, a basic homeowner's insurance policy is likely to cover additional living expenses that you incur.
- Claims in your area. An insurance company will look at the history of claims in your neighborhood to estimate a premium. For example, if your neighborhood has experienced a high rate of burglaries or wildfires, you will likely pay a higher premium.
- Your claims history. If you are renewing a homeowner's insurance policy and have made several claims, you should expect to pay a higher premium. In extreme cases, insurance companies may decide against renewing a policy
- Value of your home. You can obtain policy coverage for the replacement value of your home or its actual cash value. Replacement cost coverage protects you from inflation in home-repair costs. Actual cash value insures your home for its current value.
- Deductible. A deductible is the amount you pay before the insurer begins to pay your claim. By paying a higher deductible, you're sharing the insurer's risk of paying a claim on your home. As a result, the insurer is likely to offer a lower premium.
- Safety measures. Installing fire detection, sprinkler and theft-deterrent systems can help you to lower your premiums. You can also take steps to reduce the possibility of an accident occurring on your property.
Together with auto insurance, homeowner's insurance constitute what is called property & casualty insurance. P&C is distinct from life and health insurance. Some insurers offer P&C insurance while others do not. You may find that your current auto insurer is willing to issue you a homeowner's insurance policy.
Like all insurance in the U.S., homeowner's insurance is regulated by state insurance commissions. The umbrella organization is the National Association of Insurance Commissioners (NAIC). The NAIC maintains a directory of state insurance commissions at its Web site.
If you have any questions concerning policy coverage, exclusions or limits, contact the insurance agent or company that sold you the policy or your mortgage lender.
Save your money click here to obtain a free quote of Home Insurance >>
The Need for Home Owner Insurance
So you purchased a house. Congratulations! Buying a home is a big step in anyone's life and a great investment. Now it's time to protect your investment by purchasing home owner insurance.
Home insurance is an insurance policy that covers your house, the garage, other related structures, and also personal possessions inside the home against damages caused by everything from fire to natural disasters and even theft. Different home insurance policies offer different levels of coverage. An all-risk policy, for example, covers your home and your property against any and all disasters or theft. However, just like with any insurance policy, the higher the coverage, the higher your premiums.
Home Owner Insurance and Coverage
Many lending institutions mandate mortgage clients to have a basic level of home owner insurance to receive a home loan. This requirement guarantees them that in the case of a catastrophic event, their mortgage balance will still be paid out. But you don't need to stop there. Depending on what specific items and areas of your home you want protected and in what type of event (i.e. earthquake, fire, theft) you want your home protected in, you can increase your home insurance coverage above and beyond the level required by the mortgage company. The price of your home is fundamentally where you begin when deciding on the level of coverage for your home.
So, you need to first establish the amount it would cost to repair and/or rebuild your home. Once that amount has been established, insure your home for that amount. Some home owner insurance policies also automatically adjust the level of coverage each year to take into consideration appreciation and the increased value of your home.
Home Owner Insurance and Personal Property
Remember, protecting your home is not the only reason to get home insurance. Different levels of coverage can also protect the items in your home. It you want to protect your home and everything in it, take inventory of your personal property, including furniture, high-end electronics and appliances, and anything of value. This will establish a value for all items in your home. Take this value and add it to the coverage level of your home insurance policy. If you can't afford that amount of coverage, take a percentage of the overall value of
your personal property and adjust the level of coverage based on what you can afford and what you'd want replaced. If you want to protect your personal property, you need home owner insurance.
Home Owner Insurance and Pets
Believe it or not, your pets play a part in why you need home owner insurance and in deciding the level of home insurance coverage you choose. That's because your pets can cause damage to your home and injury to others. Different levels of home insurance coverage also cover injury in the home and protect you against lawsuits. If you have pets, remember that they can lead to damage and injury; so invest in home insurance and choose your level of home insurance coverage accordingly.
If you want to protect your home and your family, you need home insurance. It covers you when the unexpected occurs. Without it, you could end up losing everything.
Save your money click here to obtain a free quote of Home Insurance >>
Home insurance is an insurance policy that covers your house, the garage, other related structures, and also personal possessions inside the home against damages caused by everything from fire to natural disasters and even theft. Different home insurance policies offer different levels of coverage. An all-risk policy, for example, covers your home and your property against any and all disasters or theft. However, just like with any insurance policy, the higher the coverage, the higher your premiums.
Home Owner Insurance and Coverage
Many lending institutions mandate mortgage clients to have a basic level of home owner insurance to receive a home loan. This requirement guarantees them that in the case of a catastrophic event, their mortgage balance will still be paid out. But you don't need to stop there. Depending on what specific items and areas of your home you want protected and in what type of event (i.e. earthquake, fire, theft) you want your home protected in, you can increase your home insurance coverage above and beyond the level required by the mortgage company. The price of your home is fundamentally where you begin when deciding on the level of coverage for your home.
So, you need to first establish the amount it would cost to repair and/or rebuild your home. Once that amount has been established, insure your home for that amount. Some home owner insurance policies also automatically adjust the level of coverage each year to take into consideration appreciation and the increased value of your home.
Home Owner Insurance and Personal Property
Remember, protecting your home is not the only reason to get home insurance. Different levels of coverage can also protect the items in your home. It you want to protect your home and everything in it, take inventory of your personal property, including furniture, high-end electronics and appliances, and anything of value. This will establish a value for all items in your home. Take this value and add it to the coverage level of your home insurance policy. If you can't afford that amount of coverage, take a percentage of the overall value of
your personal property and adjust the level of coverage based on what you can afford and what you'd want replaced. If you want to protect your personal property, you need home owner insurance.
Home Owner Insurance and Pets
Believe it or not, your pets play a part in why you need home owner insurance and in deciding the level of home insurance coverage you choose. That's because your pets can cause damage to your home and injury to others. Different levels of home insurance coverage also cover injury in the home and protect you against lawsuits. If you have pets, remember that they can lead to damage and injury; so invest in home insurance and choose your level of home insurance coverage accordingly.
If you want to protect your home and your family, you need home insurance. It covers you when the unexpected occurs. Without it, you could end up losing everything.
Save your money click here to obtain a free quote of Home Insurance >>
How to Shop for Homeowner’s Insurance
While the residential mortgage market continued to pace a modest economic recovery in the U.S. in 2004, homeowners found themselves paying more for homeowner's insurance -- if they were able to find it.
Homeowner's insurance protects homeowners from damages to their home that are sustained from bad weather, tornados, fire and similar casualty losses. (Flood insurance is sold as a separate policy.) It also protects them from potential liabilities that occur on their property -- a neighbor's child who falls on the driveway, for instance.
Mortgage lenders require borrowers to obtain a homeowner's insurance policy as a means of protecting the collateral of their loans. Since the insurance industry is regulated by state commissions, availability and affordability of homeowner's insurance varies among states. The National Association of Insurance Commissioners (NAIC) maintains a directory of state offices at its Web site.
The Wall Street Journal reported in May 2002 that 23 state insurance commissions had granted Allstate Corp. permission to hike homeowners' premiums an average of nearly 20%.
In Texas, premiums have doubled in some areas while the number of homeowners whose policies were not renewed has soared. Meanwhile, State Farm Mutual Automobile Insurance stopped underwriting new policies for homeowners in Texas, California and Louisiana, the Journal said.
What are some of the reasons for these premium hikes and the drying up of policy coverage?
Major sources of blame are a rash of weather-related catastrophes, higher home-repair costs and the emergence of mold claims, says Robert Hartwig, chief economist for the Insurance Information Institute.
While mold claims have been around for a long time, Hartwig blames an explosion in claims and related lawsuits for directly impacting the availability of homeowner's insurance in Texas. He says mold-related claims in Texas increased nearly sevenfold in the second quarter of 2001 over the first quarter of 2000. Over the same period, insurer payouts increased more than eightfold.
In addition, home-repair costs are increasing at 7% a year -- well above the average rate of inflation, Hartwig says. Together, these factors are contributing to an average annual increase of 9% hike in premiums for homeowner's insurance for 2002, the Institute estimates.
Homeowners in California are facing their biggest crunch in paying for homeowner's insurance since the Northridge earthquake of 1994. According to a survey by the Insurance Information Network of California, insurers in that state paid $430.5 million in water-and mold-damage claims in 2001, more than double the amount paid in 1997, the Los Angeles Times reported in January 2003.
In addition to State Farm's dropping new policies for California homeowners, the state insurance commission recently approved Allstate's request for an 18.5% hike in homeowners' premiums.
Sure, homeowner's insurance is harder to come by and more expensive, but if you apply some of the basics in this educator you shouldn't have too many problems.
Save your money click here to obtain a free quote of Home Insurance >>
Homeowner's insurance protects homeowners from damages to their home that are sustained from bad weather, tornados, fire and similar casualty losses. (Flood insurance is sold as a separate policy.) It also protects them from potential liabilities that occur on their property -- a neighbor's child who falls on the driveway, for instance.
Mortgage lenders require borrowers to obtain a homeowner's insurance policy as a means of protecting the collateral of their loans. Since the insurance industry is regulated by state commissions, availability and affordability of homeowner's insurance varies among states. The National Association of Insurance Commissioners (NAIC) maintains a directory of state offices at its Web site.
The Wall Street Journal reported in May 2002 that 23 state insurance commissions had granted Allstate Corp. permission to hike homeowners' premiums an average of nearly 20%.
In Texas, premiums have doubled in some areas while the number of homeowners whose policies were not renewed has soared. Meanwhile, State Farm Mutual Automobile Insurance stopped underwriting new policies for homeowners in Texas, California and Louisiana, the Journal said.
What are some of the reasons for these premium hikes and the drying up of policy coverage?
Major sources of blame are a rash of weather-related catastrophes, higher home-repair costs and the emergence of mold claims, says Robert Hartwig, chief economist for the Insurance Information Institute.
While mold claims have been around for a long time, Hartwig blames an explosion in claims and related lawsuits for directly impacting the availability of homeowner's insurance in Texas. He says mold-related claims in Texas increased nearly sevenfold in the second quarter of 2001 over the first quarter of 2000. Over the same period, insurer payouts increased more than eightfold.
In addition, home-repair costs are increasing at 7% a year -- well above the average rate of inflation, Hartwig says. Together, these factors are contributing to an average annual increase of 9% hike in premiums for homeowner's insurance for 2002, the Institute estimates.
Homeowners in California are facing their biggest crunch in paying for homeowner's insurance since the Northridge earthquake of 1994. According to a survey by the Insurance Information Network of California, insurers in that state paid $430.5 million in water-and mold-damage claims in 2001, more than double the amount paid in 1997, the Los Angeles Times reported in January 2003.
In addition to State Farm's dropping new policies for California homeowners, the state insurance commission recently approved Allstate's request for an 18.5% hike in homeowners' premiums.
Sure, homeowner's insurance is harder to come by and more expensive, but if you apply some of the basics in this educator you shouldn't have too many problems.
Save your money click here to obtain a free quote of Home Insurance >>
Homeowners Insurance Review
When purchasing a home, your mind is probably filled with the details of the mortgage and the move. What kind of homeowners insurance you're receiving may be the last thing on your mind, but here's why it shouldn't be. Types and amounts of coverage vary considerably from policy to policy and company to company. Imagine how desperate you would be in the case of a total loss of your home, and you can begin to understand how important this choice is. You should never lose sight of the fact that it is your decision, and an important one to protect your number one asset.
You need to know how the homeowners insurance company will determine the value of your home, what is covered including the property in the home, and the level of liability coverage for damage accidentally caused to your home or someone else's property. How much would it cost to replace your belongings contained in the home? These and other questions should take center stage when selecting a home insurance policy.
The homeowners insurance company may determine the worth of your home several ways. Be sure you know which method they will use and how it could affect the amount you would receive in case of a total loss. The worth of your home can be expressed as both replacement cost and actual cash value. Replacement cost expresses the expense to rebuild or buy a comparable home and comparable items to those that were lost. Actual cash value expresses what the home and the items themselves are worth.
This is more potentially problematic for items such as clothing, as apparel can lose nearly 100% of its value immediately after purchase.
The second consideration has to do with whether the insurer plans to value your home at the time of policy or at the time of loss. You should consider this carefully, because appreciation of homes varies greatly from region to region and year to year. You will also want to consider how long you plan to live in the home and hold the policy. If you expect your home's value to stay at about the same level or go down before you move out or change your coverage, you'll want to have your coverage based on the value at the time of the policy. If you expect the value to increase rapidly and remain high until you move out or restructure your coverage, then a valuation at the time of loss will suit you better. Your insurer may or may not offer more than one option for valuing your home, but you can shop around and find an insurer who will value using the method you desire.
Do you need extended coverage? You should know how much coverage your basic homeowners insurance includes for items in your home. If you have jewelry, expensive electronics, silver, or other things of high value, ask yourself if your coverage would replace these items as well as all your other belongings. If not, you may be wise to purchase extended coverage to cover the most valuable items.
How much should be allotted for accidental damage to your home or to someone else's property? Your insurance agent can give you some insight, but ultimately the choice is up to you. This is one of the more overlooked, but equally important, parts of your homeowners insurance policy.
You can discuss your options with your insurance agent, a financial planner, and even friends and family, but be sure in the end that you're making the decision that is best for you. It is your home, after all, and home insurance offers you the peace of mind you should demand when making such a large investment.
Save your money click here to obtain a free quote of Home Insurance >>
You need to know how the homeowners insurance company will determine the value of your home, what is covered including the property in the home, and the level of liability coverage for damage accidentally caused to your home or someone else's property. How much would it cost to replace your belongings contained in the home? These and other questions should take center stage when selecting a home insurance policy.
The homeowners insurance company may determine the worth of your home several ways. Be sure you know which method they will use and how it could affect the amount you would receive in case of a total loss. The worth of your home can be expressed as both replacement cost and actual cash value. Replacement cost expresses the expense to rebuild or buy a comparable home and comparable items to those that were lost. Actual cash value expresses what the home and the items themselves are worth.
This is more potentially problematic for items such as clothing, as apparel can lose nearly 100% of its value immediately after purchase.
The second consideration has to do with whether the insurer plans to value your home at the time of policy or at the time of loss. You should consider this carefully, because appreciation of homes varies greatly from region to region and year to year. You will also want to consider how long you plan to live in the home and hold the policy. If you expect your home's value to stay at about the same level or go down before you move out or change your coverage, you'll want to have your coverage based on the value at the time of the policy. If you expect the value to increase rapidly and remain high until you move out or restructure your coverage, then a valuation at the time of loss will suit you better. Your insurer may or may not offer more than one option for valuing your home, but you can shop around and find an insurer who will value using the method you desire.
Do you need extended coverage? You should know how much coverage your basic homeowners insurance includes for items in your home. If you have jewelry, expensive electronics, silver, or other things of high value, ask yourself if your coverage would replace these items as well as all your other belongings. If not, you may be wise to purchase extended coverage to cover the most valuable items.
How much should be allotted for accidental damage to your home or to someone else's property? Your insurance agent can give you some insight, but ultimately the choice is up to you. This is one of the more overlooked, but equally important, parts of your homeowners insurance policy.
You can discuss your options with your insurance agent, a financial planner, and even friends and family, but be sure in the end that you're making the decision that is best for you. It is your home, after all, and home insurance offers you the peace of mind you should demand when making such a large investment.
Save your money click here to obtain a free quote of Home Insurance >>
