Home Insurance

By Anna Lynn C. Sibal

Home insurance, also known as homeowners’ insurance, is an insurance policy that a homeowner purchases to protect his residence from loss or damage to the edifice itself or the items that the house contains. Home insurance is also designed to protect the homeowner from claims brought about by accidents to third parties that may occur inside his or her premises.

The damages and losses that a basic home insurance can cover include theft, vandalism, temporary loss of use and fire. Exactly what damages and losses that a home insurance plan will protect the insured against is listed in detail on the policy itself, which makes the document itself typically long. The items that the home contains which are to be insured under the policy will also have to be named and listed, or else they shall not be covered.

It is to be noted that while home insurance plans exist to protect a home from damages, there are situations that a policy will not cover in case it happens. These are called “Acts of God” or force majeure, events that do not fall under human control. Situations that are typically considered “Acts of God” or force majeure are floods, storms, earthquakes, volcanic eruptions and other natural disasters. A home insurance plan does not cover damages brought about by war or political turmoil as well.

Although perpetual home insurance, where a home is insured for without a fixed or specified term, the kind of home insurance plan usually offered is only for a fixed term. The insurance term is renewable and the insured party is required to pay the premium for the policy at the start of each term. The amount of premium that the insured party would be made to pay the insuring company depends on the actual condition of the house as well as its location and environment. A house that is less likely to sustain damage or has tools and equipment that can easily prevent damage, such as sprinklers and fire alarms, would cost the homeowner a low premium. The same applies if the house is located near, say, a fire station. The age of the house also affects the amount of premium to be paid.

Because the specifics of what is to be covered and protected by a home insurance plan should be listed, there are different types of home insurance plans according to their riders, the riders being additional clauses of protection to the policy. These kinds of home insurance policies are:

HO-1. HO-1 protects only items that the house contains which are listed in the policy. This policy is used to insure against theft or damage of rare and valuable items such as antiques, paintings and sculpture.

HO-2. HO-2 is more commonly known as a “named perils” policy. It only protects specified portions of the house in the event of the occurrence of certain situations. The situations themselves are enumerated in the policy.

HO-3. HO-3 is the most extensive of all kinds of home insurance policies. It is also known as “all risk” and “open perils” policy, and it protects against all possible losses and damages to the entirety of the house and everything it contains. It also answers for claims made by third parties in the event of accidents happening within the premises of the home.

HO-4. HO-4, more commonly known as the renters’ insurance, protects apartment complexes.

HO-5. HO-5 is a home insurance policy designed to protect the home from damages that may be caused by a visitor to the house or by passersby.

HO-6. HO-6 is protection for condominium owners and their lessees.

HO-7. HO-7 is specifically for mobile home owners.

HO-8. HO-8, commonly called “older home insurance,” allows homeowners whose homes have a higher replacement value than their actual value on the market to get their homes insured at a rate that is lower than what is usually allotted to homes with the same value as the actual market value of their homes.