What is Homeowners Insurance?
Homeowners insurance, also commonly called hazard insurance and often abbreviated in the US real estate industry as H03 is a type of property insurance that covers a private residence.
Homeowners policy combines various personal insurance protections, which can include losses occurring to one’s home, its contents, loss of use (additional living expenses), or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.
What are the typical coverages on Homeowners policy?
Section I — Property Coverages
Coverage A – Dwelling
The homeowner is cover for the value of the dwelling itself (not including the land). Typically, a coinsurance clause states that as long as the dwelling is insured to 80% of actual value, losses will be adjusted at replacement cost, up to the policy limits.
Coverage B – Other Structures
The homeowner is cover for other structure around the property that are not used for business, except as a private garage.
Coverage C – Personal Property
The homeowner is cover for personal property, with limits for the theft and loss of particular classes of items (e.g., $200 for money, banknotes, bullion, coins, medals, etc.). Typically 50 to 70% of coverage A is required for contents, which means that consumers may pay for much more insurance than necessary.
Coverage D – Loss of Use/Additional Living Expenses
The homeowner is cover for expenses associated with additional living expenses (i.e. rental expenses) and fair rental value, if part of the residence was rented, however only the rental income for the actual rent of the space not services provided such as utilities.
The homeowners is cover for a variety of expenses such as debris removal, reasonable repairs, damage to trees and shrubs for certain named perils (excluding the most common causes of damage, wind and ice), fire department changes, removal of property, credit card / identity theft charges, loss assessment, collapse, landlord’s furnishing, and some building additions. These vary depending upon the form.
In an open perils policy, specific exclusions will be stated in this section. These generally include earth movement, water damage, power failure, neglect, war, nuclear hazard, septic tank back-up expenses, intentional loss, and concurrent causation (for HO3).
Flood damage is typically excluded under standard homeowners and renters insurance policies. Flood coverage, however, is available in the form of a separate policy both from the National Flood Insurance Program (NFIP) and from a few private insurers.
Section II — Liability Coverages
Coverage E – Personal Liability
Covers damages which the insured is legally liable for and provides a legal defense at the insurer’s own expense.
Contact us to learn more about the right homeowners insurance for you.