In this time of recession, home insurance is the farthest thing in your mind to buy. You would rather set aside the extra money that you have for emergencies. But what if your house were robbed or burned down in a fire and you lost everything, every single appliance and other valuable things.
You have the money to replace some of the things destroyed but not enough to replace all the items.
Home insurance offers financial protection to you if your house or the contents in them were damaged or destroyed. A home insurance company will pay to enable you to rebuild your home, replace your properties or cover the cost of moving home.
When buying an insurance for home, you should know the two subcategories of home insurance policy in terms of covered risk. They are all peril and peril home insurance policies.
All peril home insurance policy does not specify risks covered but includes everything else.
On the other hand, buy home insurance peril if you want a policy that specifies risks covered and leaves out everything else.
Home insurance companies offer various policies that to find home insurance that will give you the best protection can be a challenge.
Here are types of home insurance policies and home insurance coverage:
- HO-1 or the basic home insurance policy. Its protection covers fire, windstorm, explosion, riot, lightning, vandalism, smoke, damages caused by aircraft and vehicles, theft and volcanic eruptions. This is an uncommon type of home insurance coverage.
- Broader policy of HO-2. It covers risks such as falling objects, leaks from plumbing, air-conditioning, fire-sprinkler systems and heating, weight of ice, sleet or snow, bursting, cracking or freezing of air-conditioning, fire-sprinkler systems and plumbing and accidental and sudden damage to appliances or fixtures caused by electrical discharges.
- HO-3 all-peril policy. This is the most common home owner insurance policy and covers all risks, excluding those specifically stated in the contract such as damages caused by an earthquake, flood, nuclear accident, war, landslide, sinkholes and mudslide. Some home insurance companies limit or exclude coverage for mold.
In terms of home insurance claims or reimbursement of loss, there are two types available, replacement cost coverage and actual cash value.
The actual cash value covers only the face value and actual amount of the home and its contents.
On the other hand, replacement cost coverage does not include the item by item replacement of the home structure and its contents.