If you have recently purchased a new home, then you are probably
considering whether or not to buy homeowners insurance. Having
homeowners insurance is a financially preventative measure that will
help you cover the costs of highly expensive repairs to your home and
your possessions in the event of a disastrous event. Without
homeowners insurance, the cost to repair or replace property and
valuables can add up quickly. In addition, homeowners insurance can
provide temporary living solutions in the event that your home is
unlivable for a period of time. If you are unsure about your need for
homeowners insurance or need more info before making a decision, read
What Is Homeowners Insurance?
Homeowners insurance protects your home and personal belongings
against any sort of damage. It protects anything related to your home
such as the property it is located on and the people who live inside
of it. Homeowners insurance generally comes with two primary types of
coverage: liability and damage. Liability insurance protects your home
from injuries that other people sustain while on your property. For
example, if someone in your home trips and falls, homeowners insurance
can cover the cost of their medical bills. Your insurance policy can
also cover any damage to your home by covering all or some of the
How Does Homeowners Insurance Work?
Homeowners insurance can be a financial cushion for your home and your
personal belongings in the case of a disaster or liability. If your
home is damaged, then it is your responsibility to pay for the
repairs, but if you have homeowners insurance, then your provider will
be able to pay for its repairs. To begin a claim, contact your
insurance provider and explain what damage has occurred. From there,
an insurance adjuster will help you assess the damage in order to
determine the amount of compensation you will receive. The amount of
coverage you receive will depend on your policy limits. Some factors
that can affect this are the financial limits set on your policy, the
deductible amount paid, and whether you have chosen coverage based on
cash value or the replacement value of your home and its belongings.
Your rate is determined by several factors that are used by the
company to determine your home's overall risk for damage or theft.
The less likely your home is to undergo damage, the cheaper your rate
will be. When you make a claim, the insurance company pays for the
damage that has occurred.
Do I Need a Homeowners Insurance Policy?
Unlike car insurance, homeowners insurance is not always legally
required. However, having homeowners insurance can help you protect
one of the most valuable assets that you own. Most mortgage lenders
require homeowners insurance in order to qualify you for your rate.
Before you are able to refinance or initially fund your mortgage, the
company will likely ask you to provide proof of insurance. This is to
provide additional security on both yours and the lender's behalf.
If you do not buy homeowners insurance yourself, then your lender is
legally allowed to purchase insurance on your behalf and charge you
for the total cost. A basic homeowners insurance policy provides
coverage for your person and house, but
many policies cover far more
than that. They also often cover structures like sheds or other
storage buildings, or incidents that may occur in your home. In
addition, they can cover attached structures like decks, garages, and
fences or personal property loss due to damage or theft. Certain
liability coverages can also take care of instances in which you or a
family member under your policy is found legally responsible for an
accidental damage to another person's property.
Having homeowners insurance can protect you from legal liability in
these cases. In addition, if a guest is injured by an accident in your
house, then guest medical protection can help to pay for his/her
medical bills. Homeowners insurance can also cover instances in which
you can't stay in your home after a fire or other incident covered
under your policy. In these situations, homeowners insurance can help
pay for temporary living costs like hotel bills.
What Types of Homeowners Insurance Policies Are There?
There are eight different types of homeowners insurance, each with
their own specific coverage types that have their own advantages and
disadvantages. Read on through the different kinds of homeowners
insurance to decide which policy will work best for your situation.
This is a basic insurance policy with a limited amount of coverage. It
generally protects your home from the eleven specific natural
disasters outlined in its policy like fire, windstorms, hail, or
lightning. They often cover personal belongings within the home, but
not always. HO-1 is the most basic and inexpensive type of policy
available for homeowners insurance, and it is not available in many
This policy includes all damage covered by HO-1 as well as additional
specific incidents. These include damages sustained from falling
objects and water damage. Like the previous policy option, only
incidents specifically listed in this policy are applicable. This
policy is a bit more comprehensive in scope, but it can leave you
vulnerable if an incident that is not specifically listed in your
policy occurs. If you do not live in a high-risk area for theft or
natural disaster, then this could be a viable option for your home or
This is the most commonly purchased homeowners insurance option
because of the broad range of coverage. It protects against sixteen of
the most common perils and any other risk that may occur except for
those that are specifically excluded such as earthquakes, floods, or
nuclear accidents. The policy will cover personal belongings in the
home, based on the terms outlined in the HO-2 policy, which means that
belongings are only covered in specific instances. Individual
insurance agencies will often cover different events or disasters;
make sure to check with your agent to find out which specific events
are covered under your policy. If you want to cover against a wide
range of the most common incidents, then HO-3 can be a great
HO-4 is known primarily as renters insurance and it covers property in
a rented home or apartment. Renters are encouraged to get a HO-4
policy to cover any damaged or stolen personal belongings as most
insurance plans held by landlords won't cover personal property
losses. HO-4 can be a great option if you are primarily concerned
about the belongings in your home, but it does not cover damage to the
property itself. If your landlord allows for modifications or
additions to the rented property, then those can be covered under the
HO-4 policy as well.
The HO-5 policy is essentially a HO-3 policy with one minor caveat.
HO-5 covers personal property from just about any incident that could
occur except for those that are specifically excluded. Because of this
policy's comprehensive nature, it is generally more expensive than
other policies. HO-5 is the most comprehensive homeowners insurance
policy available. If you are concerned about damages to your home or
property that are not covered under a less specific policy, then this
could be a great option for you.
HO-6 policies are designed for owners of condos and tenants who live
in co-ops. Most condos and co-ops provide different homeowners
insurance policies for their tenants. If you are the owner of one of
these structures, then you want to make sure that you have a
comprehensive insurance policy in place for your property. HO-6 policy
generally covers the wall, ceiling, and floor of the residence as
HO-7 insurance falls under the same level of coverage as a HO-3 policy
but is specifically designed for mobile homes as they are not covered
by HO-3 policies. The term mobile home does not only encompass
trailers but also the recently popular "tiny home.”
HO-8 policies are designed for old homes that require repairs or
replacements that are more expensive than the current cash value of
the home. These policies are generally reserved for landmarks or
historically significant places. Homes that are newer than 40 years
old generally will not be covered under this policy.
How Much Coverage Do I Need?
As you can see, a variety of policies exist to make sure that every
living situation is covered. When deciding on which one is best for
you, consider these factors:
1. What You Need to Insure
You should select the homeowners insurance policy that will provide
the most comprehensive level of protection for your specific
situation. For example, if you live in an older home, then a HO-8
policy will likely be the best option for you.
2. How Much You Need to Insure
A more expensive home or property will require a larger deductible to
properly insure. In addition, multiple structures around your home or
expensive possessions will require more extensive coverage.
3. How Much You Want
The largest factor in selecting homeowners insurance is how much
coverage you think will suit your situation best. If you live in an
area that is at a higher risk for theft or natural disaster, then you
will want to purchase more coverage. Overall, the more property that
you own or rent and how expensive your assets are worth directly
correlates with the amount of coverage and price of your deductible.
Selecting Your Policy
Consider all of these factors to help you decide how much coverage you
need from your homeowners insurance policy. You may find that you need
several types of homeowners insurance because of the property that you
own. In these instances, you may be able to bundle insurance in order
to get the best price available. If you are concerned about specific
instances not covered under your policy, it is always a good idea to
consult with your local Acceptance Insurance agent. We will be happy
to work with you to help provide the best coverage possible for the
There are plenty of options available for homeowners insurance. In
addition, many companies are willing to provide you with quotes for
free, and there are plenty of websites that allow you to compare
quotes and coverage online for free. If still need help deciding on
homeowners insurance or if you are ready to make your decision and
insure your home and property,
get a free quote from Acceptance