Within the home insurance industry, there are different types of designations for policies depending on your needs in property insurance. For example, if you are renting, you will need a renters’ insurance policy. If you have a condo, the policy takes the form of a condo owners’ policy. If you own your own home and it is not considered to be part of a condominium, then you will have a HO policy, which means a home owner’s policy.
There are various aspects to consider when taking out a HO insurance policy. The first and most important is the structure of the home. The amount of coverage is equal to or more than your mortgage and is usually determined by appraising your home to see what it is worth on the real estate market. In this aspect, you have two decisions to make – a standard policy or one that has replacement cost. If you have replacement cost in your policy and you suffer a total loss, then the compensation will be based on the current costs so that you will be able to replace what was destroyed. Without this type of coverage, all the costs you initially paid are subject to depreciation over the years. This means that if you have lived in this home for a number of years, you will get a percentage of the original cost and this may not be enough for you to replace the home.
As part of a HO policy, you also have coverage on your belongings, such as furniture and clothing. The amount of this coverage is generally equal to half the amount of coverage on the structure. It would be a good idea to add up the cost of your belongings and if this amount is more than what half of the overall coverage amounts to, you can up this coverage to give you the contents coverage that meets your needs. However, if you have expensive items in your home, such as art work, expensive electronics, jewelry or antiques, you might want to consider taking out extra insurance on these items in what is called a floater on your insurance policy.
With a HO insurance policy, the insurance coverage on the structure of the home remains in place if you decide to rent or lease your home. The renters who occupy the premises are responsible for taking out their own insurance policy on their belongings.
As part of a HO insurance policy you also have coverage for any outbuildings you have on your property. This coverage is usually 10% of the overall coverage on the home. It does not, however, provide coverage for the contents of these buildings. If you have a garage, then you need to have a separate insurance policy on the vehicles inside. Lawnmowers and ATV’s are also not covered under the outbuilding insurance and are relatively cheap to insure on their own.
The policy you have for home owner’s insurance covers any damage that you do to the property of another, vandalism that may occur and any injuries others may sustain while on your property. Maintenance of the home is your responsibility and to ensure that your policy will cover any damages you do have to undertake annual maintenance to prevent undue damage occurring to the home.
Fire, lightning, theft and damage from wind, snow, ice and hail are the common perils listed in a standard HO policy. Water damage is covered if the source of the flooding comes from inside the home. Flood damage is not part of such a policy and you will need to take out extra insurance if you live in an area that is prone to flooding. Earthquake insurance is also not part of such a policy and in fact there are very few insurers who do issue such a policy with or without a HO policy.
Dogs, too, can be listed on your insurance policy to give you the protection you need if you own a dog. Your pet may be very calm, but on times it is possible that it may bite an adult or child and having this floater in your policy will give you the coverage that you need. The type of dog will determine the amount of your premium. Having a pit bull, for example, could result in high premiums.
The amount of deductible on a standard HO insurance policy is usually $500. This is the amount for which you are responsible for paying before the insurance policy will take over to cover the rest of the cost of repairs. You can lower your premiums by choosing a higher deductible because this tells the insurer that you are willing to take a bigger stake in making sure your home and property is safe.