Homeowners insurance is a type of property insurance for private homes. It is a kind of combined insurance because it brings together different types of protection. These can include loss of home or property in the home, loss of personal possessions, and liability used to cover accidents in the area covered by the policy.
Homeowners insurance can cover many things, but it only requires one premium for all of them. The cost of the insurance is contingent upon what it would cost to replace the house, in the event that it becomes uninhabitable, and whatever the policy might cover in addition to the property. There are standard exclusions to homeowners insurance that will require additional insurance to cover. These include termites, flooding and war.
This type of insurance is usually done for a specified amount of time. For the duration of the policy, the insured makes premium payments to maintain coverage every term. Premiums can be reduced if it seems as though the house is less likely to be damaged or destroyed. Some of these can be done by the home owners, others cannot.
If the home has fire sprinklers, alarms and hurricane shutters installed, premiums are likely to go down. Age and construction are factors as well. New homes will have lower premiums, as will homes made from fire-resistant materials like brick. Location can be a factor because proximity to fire and police stations can bring the cost down, while being in high crime areas or places prone to wildfires can send the cost up. There are some things that can be found in a house that will raise premiums because they increase risk: swimming pools, aggressive dogs, trampolines.
There a different types of homeowners insurance polices, each with its own advantages and disadvantages. Differences include what damage and liability is covered and the type of residence that is covered. HO1, 2, 3 and 5 provide increasing levels of coverage for single-family homes. Some of the risks covered by them include damage by vehicle, fire and civil commotion. HO4 is for renters. HO6 for condominiums. And HO8 for homes whose replacement costs exceeds the property's value.
Each policy type can have one of five classifications depending on what is receiving coverage. These coverages can include dwellings, not including land, other structures around the property that are not used for business, personal property, loss of use of part of the property, and miscellaneous services like debris removal.
Homeowners insurance can cover a wide variety of things. It can be a form of combined insurance as it is typically used to insure more than just a home, but also what is in a home and the people in the home.