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 on.
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 repair costs.
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
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
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
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 states.
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 property.
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 all-around option.
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 well.
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 best
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 today.
Homeowners insurance is a type of coverage that protects you financially in the event of an accident, disaster, or theft involving your home. A standard homeowners insurance policy will include four types of coverage: structure, personal belongings, additional living expenses, and liability.
Buying a home is an incredible accomplishment and while we know it’s a happy time in a person’s life, it is important to remember that there are things that can happen. How do you keep yourself safe if your home ever experiences a fire, flood, or other types of damage? We recommend finding the right type of homeowners insurance that fits you and your family. No matter what your circumstances are, we are here to help you find the right plan.