What is Home Insurance Policy?
Home insurance policy is the coverage that takes care of the financial losses that might occur to your home, to its contents, loss of its use, additional living expenses, and loss of other personal possessions of yours as well as liability coverage for accidents that may happen at your home. Home insurance policy is a contract for a fixed period of time for which you have to pay monthly premiums. The premiums are determined by the risk that shadows your home. If you have a home that is less prone to risks like fire accidents or other natural calamities, then you can have a considerable discount on the premiums.
Home insurance policy or home owners insurance in the United States of America is broadly classified into 7 types which correspond to different extent of coverage offered by each policy. All the above home insurance policy is standardized by the ISO or the Insurance Services Office. The policies are HO- 1, HO- 2, HO- 3, HO- 4, HO- 5, HO- 6, and HO-8.
The most common home insurance policy availed by the US people is the HO- 3. This is followed by HO- 4 and HO- 6.
The first home insurance policy or the HO- 1 offers only selective coverage for the objects that is outlined in the policy. HO- 1 is useful for providing cover any particular valuable at home. HO-2 is a similar policy that offers policy for selected parts of your home against damage. The policy usually consists of events called ‘named perils’.
The next home insurance policy HO- 3 is the most commonly desired policy that covers a wide range of features like home and all the contents in it, structure, and liability coverage, accidents that might occur in your home or injury in its premises. All the coverage items and the exclusions must be clearly defined to ensure proper coverage.
HO- 5 is similar to HO- 3 but with a differential cover. HO-4 is the home renters insurance while HO- 6 is meant for condominium dwellers. HO- 8 is the home insurance policy that is often referred to as older home insurance.
Home insurance policy can either be for a long term called the perpetual insurance. There are several companies offering home insurance policies but differs from one state to another depending upon the state laws as well as the geographical requirements.