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Home
insurance, or homeowners insurance, is an insurance
policy that combines insurance on the home, its
contents, loss of use (additional living expenses)
and, often, the other personal possessions of
the homeowner, as well as liability insurance
for accidents that may happen at the home.
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The cost of homeowners insurance scales upward
depending on what it would cost to replace the
house, and which additional "riders",
meaning 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 are not paid
due to earthquakes, floods, "Acts of God",
or war (whose definition typically includes
a nuclear explosion from any source). Special
insurance can be purchased for these possibilities,
including flood insurance and earthquake insurance.
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Most insurers charge less 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. In theUnited States, most home
buyers borrow money in the form of a mortgage,
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. |
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Types
of Homeowners Insurance : |
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There
are six kinds of homeowners insurance in general
and consistent use. Of these HO-3 is the most
common policy followed by HO-4 and HO-6. Others
that are less used, though still significant,
are HO-1, HO-2 and HO-5. Each is summarized below:
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1.
HO-1 :
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A limited policy that offers varying degrees
of coverage but only for items specifically
outlined in the policy. These might be used
to cover a valuable object found in the home,
such as a painting.
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2. HO-2 : |
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Similar to HO-1, HO-2 is a limited policy in
that it covers specific portions of a house
against damage. The coverage is usually a "named
perils" policy, which lists the events
that would be covered. As above, these factors
must be spelled out in the policy.
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3. HO-3 : |
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This
policy is the most common written for a homeowner
and is designed to cover all aspects of the home,
structure and it contents as well as any liability
that may arise from daily use as well as any visitors
who may encounter accident or injury on the premises.
Covered aspects as well as limits of liability
must be clearly spelled out in the policy to insure
proper coverage. The coverage is usually called
"all risk". |
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4. HO-4 : |
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This is commonly referrened to as renters insurance.
Similar to HO-6, this policy covers those aspects
of the apartment and its contents not specifically
covered in the blanket policy written for the
complex. This policy can also cover liabilities
arising from accidents and intentional injuries
for guests as well as passers-by up to 150'
of the domicile. Very low in cost and high in
coverage, this is a highly recommend policy
for anyone renting an apartment.
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5. HO-5 : |
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This policy, similar to HO-3, covers a home
(not a condo or apartment), the homeowner and
its possessions as well as any liability that
might arise from visitors or passers-by. This
coverage is differentiated in that it covers
a wider breadth and depth of incidents and losses
than an HO-3.
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6. HO- 6
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As a form of supplemental homeowner's insurance,
HO-6, also known as a Condominium Coverage,
is designed especially for the owners of condos.
It includes coverage for the part of the building
owned by the insured and for the property housed
therein of the insured. Designed to span the
gap between what the homeowner's association
might cover in a blanket policy written for
an entire neighborhood and those items of importance
to the insured, typically the HO-6 covers liability
for residents and guests of the insured in addition
to personal property. The liability coverage,
depending on the underwriter, premium paid,
and other factors of the policy, can cover incidents
up to 150' from the insured property, all valuables
within the home from theft, fire or water damage
or other forms of loss.
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It is important to read the Associations By-laws
to determine the total amount of insurance needed
on your dwelling. Very low in cost and high
in coverage, this is a highly recommend policy
for anyone owning a condo.
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