Homeowners insurance is for unexpected events. It covers the home itself and things that you keep in it for any injuries and property damage you, members of your family, or family pets cause to other people.
There are generally 4 components in a homeowner’s policy:
- Coverage for the structure.
- Coverage for your belongings.
- Liability coverage.
- Living expense coverage if you can’t live in your home due to a fire or other insured disaster.
Note that most policies don’t fully cover all 4 of these components, and an insurance company might have several different policies with different coverage. Most policies specifically exclude flood and earthquake damage, which can be purchased separately. Damage from lack of maintenance, such as mold or termites, is usually not covered either.
Types of Homeowners Insurance
There are several types of homeowners insurance:
- HO-1 (Basic Form): Covers only the most common perils, such as fire, lightning, and theft
- HO-2 (Broad Form): Provides more coverage than HO-1, including damage from hail, wind, and other natural disasters
- HO-3 (Special Form): The most common type of homeowners insurance, covers all perils except those specifically excluded in the policy
- HO-4 (Renters Insurance): Coverage for renters who want to insure their personal property.
- HO-5 (Premier Form): The most comprehensive type of homeowners insurance, covering all perils, including those excluded in other policies.
- HO-6 (Condo Insurance): Coverage specifically for individuals who own a condominium.
- HO-8 (Older Home Insurance): Coverage for homes that are older and have unique insurance needs.
Several factors can affect the cost of homeowners insurance:
- Location: The location of the property, including its proximity to natural disasters, crime rates, and fire departments, can affect the cost of insurance.
- Age and condition of the home: The age and condition of the home, including the type of roof and heating system, can impact the cost of insurance.
- Coverage amount: The amount of coverage you choose to purchase will affect the cost of your insurance.
- Claims history: A history of claims can increase the cost of insurance.
- Credit score: Your credit score can impact the cost of your insurance as some insurance companies consider it an indicator of risk.
- Deductible: The amount of the deductible you choose will affect the cost of your insurance.
- Personal assets: The value of your personal assets and how much insurance coverage you have for them can affect the cost of your insurance.
- Discounts: Some insurance companies offer discounts for certain factors, such as being a homeowner for a certain amount of time, having a home security system, or being over a certain age.