|When you buy a home, if you have a mortgage, you may be required by the
lender to purchase a homeowner's policy. Here's what to expect as you look
for the right policy to cover your home.|
In general, a homeowner's policy will have
a named insured, which is usually
the owner or tenant named on the deed or lease. The named insured's spouse
is covered as well, even if he or she is not named on the policy
declaration. Other users and residents also may be covered to a lesser
extent by the personal property and liability provisions in the policy. For
instance, the insured's children or someone under 21 in the insured's care
would likely be covered. Employees such as gardeners or housekeepers may
also be covered against loss of personal property on the premises. And you
may extend coverage to your guests if you make a request to your insurance
company in advance.
There are seven basic home insurance
policies, but if you are shopping for
coverage for a single-family home and you are the owner and occupant, you'll
probably be choosing from among just two or three kinds of policies.
Policies for renters and condominiums differ enough to discuss them
Because mortgage lenders are primarily concerned
with protecting their
interest in your home, the level of coverage they require might differ from
the level that you consider adequate. You may decide to purchase additional
protection depending on other factors, including the different ways
insurance companies package these policies.
HO-1 is a basic
homeowner's policy. It protects the structure and your
personal property against some common hazards such as fire and lightning,
wind and hail, smoke, theft, and damage by glass or safety glazing material
that is part of a building. This policy also protects against some pretty
exciting stuff, such as volcanic eruptions, explosion, riot or civil
commotion, aircraft, vehicles, vandalism or malicious mischief.
is an expanded version of HO-1. In addition to the above 11 perils, it
covers against six more: weight of ice, snow or sleet, three types of
water-related damage from home utilities or appliances, falling objects, and
electrical surge damage.
goes further by covering the above 17 perils and any other perils not
specifically excluded by name, such as earthquakes, floods, wars, and
In general, these policies will cover the
• to rebuild or repair your home or
some unattached structures if damaged by one or more of the perils listed
in the policy;
• related to temporary housing if
you are displaced by a qualifying peril, while you wait for repairs or
• of replacing personal
• of medical treatment incurred
by someone injured on or near your property due to your
• the cost of mounting a defense or
paying an award in a lawsuit if you are found responsible for personal
injury or property damage suffered by another person.
general, these policies won't cover
to the land on which the house is located;
related to business activities on the
• losses related to floods or
earthquakes; • damage from war or nuclear
• theft by another person covered on
the policy, such as a family member;
• losses that
exceed policy limits;
• losses sustained by someone
you rented the property to.
To set the amount of your premiums, the
issuing company will first want to
assess what kind of risk you might present. Be prepared to share plenty of
information about you and your home.
company will consider your credit rating, whether you have a criminal
record, your previous addresses, and if you have history of insurance
claims. An insurer will want to know what kind of work you do, what your
employment history is like, your marital status, and your age.
insurer will also want to know certain information about the construction
of the home. Is it brick or wood? How many square feet is it? Are there any
unattached structures on the parcel? How far is the house from a fire
station? How old is it? Is it perched on a cliff above the
Deadbolt locks, smoke detectors, and other
preventative measures can lower
your rates. But certain kinds of pets, a pool and other potential
opportunities for personal injury can raise your rates. So can running a
Once the insurer has taken this kind of information
into account, it will be
reflected in your rate quote, and it's your choice whether to accept,
renegotiate, or look elsewhere for coverage.
© 2003 Emerald