Home insurance
, also commonly called
hazard insurance
or
homeowners insurance
(often abbreviated in the real estate industry as
HOI
), is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one's home, its contents, loss of its use (additional living expenses), or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home. It requires that at least one of the named insured occupies the home. The dwelling policy (DP) is similar, but used for residences which don't qualify for various reasons, such as non-occupancy or age.
The cost of homeowners insurance often depends on what it would cost to replace the house and which additional riders—additional items to be insured—are attached to the policy. The insurance policy itself is a lengthy contract, and names what will and what will not be paid in the case of various events. Typically, claims due to earthquakes, floods, "Acts of God", or war (whose definition typically includes a nuclear explosion from any source) are excluded. Special insurance can be purchased for these possibilities, including flood insurance and earthquake insurance. Insurance must be updated to the present and existing value at whatever inflation up or down, and an appraisal paid by the insurance company will be added on to the policy premium. Fire insurance will require a special premium charge, plus the addition of smoke detectors and on site fire suppression systems to qualify.
The home insurance policy is usually a term contract—a contract that is in effect for a fixed period of time. The payment the insured makes to the insurer is called the premium. The insured must pay the insurer the premium each term. Most insurers charge a lower premium if it appears less likely the home will be damaged or destroyed: for example, if the house is situated next to a fire station, or if the house is equipped with fire sprinklers and fire alarms. Perpetual insurance, which is a type of home insurance without a fixed term, can also be obtained in certain areas.
In the United States, most home buyers borrow money in the form of a mortgage loan, and the mortgage lender always requires that the buyer purchase homeowners insurance as a condition of the loan, in order to protect the bank if the home were to be destroyed. Anyone with an insurable interest in the property should be listed on the policy. In some cases the mortgagee will waive the need for the mortgagor to carry homeowner's insurance if the value of the land exceeds the amount of the mortgage balance. In a case like this even the total destruction of any buildings would not affect the ability of the lender to be able to foreclose and recover the full amount of the loan.
The insurance crisis in Florida has meant that some waterfront property owners in that state have had to make that decision due to the high cost of premiums. See Citizens insurance.
sil3n63
asked:
"i live in southern california and my home value is 600,000. I pay 2,200 for insurance every 6 months. i think this is a little too high but would like to know if this is average. When i bought the house i was too excited that i didnt even talked to my insurance agent, who is located in Fresno, Ca. I do live near a school could that also be the reason why my home insurance is so high? Could the location make any different? Can i also change insurance or will there be a penalty? I have no clue? My insurance is through Farmer. thanks in advance!!!!!"
Question posted courtesy of:
Richard_CA replied:
"You may have the HO-5 policy which is a good policy if you live in an area where the temperature drops way below freezing. It covers things like frozen pipes and damage from weight of snow or ice. The basic policy, HO-1, is for people who live in warmer climates. It's the best value in a policy if minimum premiums are your goal. So get out your homeowner's policy so that you can check coverages and make any possible changes.Also, see what your deductible is. You can save money by raising your deductible to $500 or $1000. But be sure you check with your morgage company for the minimum required coverages.Check to see if you have replacement value coverage, not market value coverage. Replacement value coverage will pay whatever it cost to replace your home. Make sure your fire insurance is also replacement value coverage. You can also ask for an appreciation clause in your policy that will automatically raise your coverage limits each year for inflation.And, check your policy for gimmick insurance that may be attached to your policy. Examples are:Credit Life InsuranceCredit Disability InsuranceMorgage Life InsuranceAutomobile Service ContractsExtended Waranties on Appliances and ElectronicsChargegardAnd finally, check all options to your homeowners's policy. None of these are a good value.1)Removal of debris2)Damaged-property removal3)Fire department surcharges4)Temporary repairs to prevent further damage to property5)Trees, shrubs, and plants - since windstorms are excluded, this insurance is of little value6)Stolen credit cards"
princy replied:
"It depends upon the policy u choose, cover value & the company of course. U can find all these details by meeting advisors of different insurance cos. To meet the agents u can fill forms with dfferent cos. on this site lnk.in/54fh& they will send their best advisors to u. & U can crack the best deal"
Craptacular Wonderment
asked:
"The home is either livable or NOT livable...it matters NOT what disaster ruined the home.. Why then is it that you have to pay extra for each different type of circumstance? An accident is an accident.... a disaster is a disaster... the home can only be burned, flooded, distroyed by earthquake / tornado / hurricaine ONCE.. why pay for all the different ways insurance-wise? How covered is covered? And WHY !!!! Why?? Is it if you Never have any type of claim you aren't refunded some of that money you spend year after year after year? Again, once you've paid in insurance the amount of the home value.. what difference does it make if you replaced the home 'money-wise' already in insurance premiums? Why not spend those premiums on a second home instead? Just shooting in the dark here of the many complaints I have heard ranted from my elders recently.. their solutions were hysterical.. I'd love to hear more solutions."
Question posted courtesy of:
nod replied:
"You used the words paid, pay, money, spend, and they are all correct. It is all about the money, yours specifically, and how much of it the insurance industry can get (steal)."
jeeva j replied:
"hi check this link its good."
Cosmos
asked:
"I am renting my home for 4 months and that's why I need to convert my Primary home owner's insurance policy to Land lord policy. But after 4 months I can't change the insurance of my home to Primary home owner policy. But I will have to get the Home owner's insurance for the secondary home which is more expensive then the primary home. I do not live in this house. So is it okay to go for a landlord policy for 4 months and then to secondary home - insurance policy? Is there a risk of very high premium on Secondary policy, could I change the policy back to primary home owner's policy? What are the drawback of a secondary home insurance vs primary home insurance policy. Please help. Thanks."
Question posted courtesy of:
ernesto_tig replied:
"A risk of high premium?? Are you kidding? How about a risk of your property burning to the ground and being denied coverage because you were trying to save a few premium dollars by not disclosing the use of the house to the insurance company (I think they call that insurance fraud). One of my properties had a major fire (read about it on my blog) if you don't think it can happen you'd be wrong. Make double sure to match the property coverage policy to the use of the property. If you're living there it's a HO policy, not living there full time a second-home or 'vacation' property policy, renting it a landlord policy, have it open for whatever reason, a vacancy policy. Don't be premium rich and coverage stupid.The differences between a primary home and secondary (vacation house) policy vary a little by company. Some companies sell a policy where primary liability and personal property is carried on the HO policy, others keep everything seperate. Get a sample policy from your insurance person."
Miss V replied:
"If you're not living in the second house, then you should be able to get a dwelling policy. Especially if your goal is to rent it out. Your HO3, if it's a single family detached structure, should be the one for the house you will live in, as it includes personal property coverage.Are you talking with your homeowner's insurance agent at all?"
MartinM replied:
"Why not just go to an online site that will give you bids from multiple agencies. It's quick and you're not at any risk, and it will give you a ballpark figure to work with and decide what is right for you.."
Happy
asked:
"I'm in the process of buying a foreclosure home (Saratoga,CA, can't transfer the insurance since it has already lapsed) that has a detached unpermitted cottage (2 bedrooms, kitchen, bathroom and living room total of 900 sq ft), the main home also has a unpermitted converted garage that is used as a in law quarter (separate entrance and full bathroom), it also has a unpermitted sun room too. I really love the home and tried looking for home insurance but it looks like no one will insure me. Is there anyway I can get insured for this property without having to lie about these unpermitted additions to the insurance company? Any advice would be appreciated and any suggestions which insurance company would insure me for a reasonable price. Thank you in advance."
Question posted courtesy of:
EMT-B replied:
"first did you know that the the property had unpermitted additions when YOU STARTED THE PROSESS OF buying itIF NOT YOU NEED TO SEE A LAWYER.if you are buying a property with problems never pay anything for the unpermitted part. Many time you can even bargin down the value of the property. because of problems.also check with the building department as to what it will take to bring to property in to legal status. in some areas it many be easy as paying the building fees. and in others you may have to tear down unpermitted buildings. PS GET EVERY THING FROM THE BUILDING DEPARTMENT IN WRITING.If the bank did not disclose the defect when they put it up for foreclosure sale. i hope you got title insurance.if that is the case see a lawyer"
Star replied:
"I think you should go to the local building department (city or county) and apply for as built permits for these unpermitted structures. Although costly, it's better than Code Enforcement coming by, realizing that those additions/properties are unpermitted and going to court, seeking an injunction to have you (1) obtain as-built permits or (2) having them torn down.It is more expensive to have Code Enforcement come in and seek relief from the courts (assuming you don't comply and apply for as built permits) because you may have to pay their attorneys' fees when they win.I believe you apply for as built permits from the Building Department in the city. Make sure you're in the incorporated portion of the city, otherwise you'll have to go to the County Building Department.Also, if the bank didn't know that these additions were unpermitted, you wouldn't have an recourse. Most foreclosures are sold as is and requires buyer's diligence. A title insurance policy may or may not disclose unpermitted additions (depends on the wording of the policy). As I recall, a title insurance policy only guarantees that you have marketable title to the property."
Egina
asked:
"When I shop for a home insurance I am always asked if my home is currently insured or if there are lapses in my insurance policy. Some companies outright refuse to give me a quote when I tell them that I haven’t had home insurance in the last 3-4 months. I am wondering why this is important for them?! They just referred to their company policy and did not give me any meaningful reasoning. Thank you for your answer."
Question posted courtesy of:
Sagar T replied:
"Insurance companies are wary of lapses in any kind of insurance policies. In your case it just happened to be home insurance.The single most feared factor in the insurance business is not hurricanes, not bush-fires, not wars, not meteor strikes but what's known as 'moral hazard'. Moral hazard is, in simple terms, lack of inhibition in preferring a claim under less than above-the-board circumstances.For example, if your camera is insured for home use only, you cannot make a claim if the insured camera suffers damage during a jungle safari. Most of us, being honest persons, would not even want to claim under such circs. However, since, as a rule it takes all kinds to make this world, there exist individuals who would make a claim as if the damage occurred at home. Such individuals are considered to be 'moral hazards'.Coming back to your original question, insurance companies know from empirical evidence that the incidence of moral hazard is greater - much greater - in those cases where there's a break iin coverage. It's likely that the insured is trying to renew the policy after a loss has occurred.You need to provide evidence to the insurance company that you did not intend to let the policy lapse. That it lapsed, is a fortuitous happenning (please note the wording - underwriters love such language) and not a deliberate omission. 'I do not want to be penalised for something over which I had no control' is the line you need to take. You could strike lucky with this line."
mbrcatz replied:
"Because it drastically increases the risk, that whatever the "something" is that you're insuring for, has already happened, and you're going to try to commit insurance fraud with them by trying to claim it happened right after you bought the policy."
TedEx replied:
"If they would issue you a policy, how long before you would let it lapse???It costs time and money to issue a policy. It you are not going to keep it up to date, it is a waste of time for them to consider you as a potential customer."
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Very informative blog about different insurances (auto insurance, life insurance, home insurance).
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