House insurance, also known as homeowner’s insurance, is a type of insurance policy that provides financial protection to homeowners in the event of damage or loss to their property. This policy usually covers the physical structure of the house, as well as the contents inside, against perils such as fire, theft, and weather-related damage. Most house insurance policies will cover the cost of repairing or rebuilding your home as well as replacing damaged or stolen belongings, while some policies may additionally offer liability coverage, which can protect you in the event that someone is injured on your property and files a lawsuit against you.
However, different policies might offer different amounts of coverage. To be able to get affordable house insurance as a new home owner in the US, you will need to do proper research.
Tips to finding affordable house insurance as a new homeowner
- Shop around: Don’t settle for the first insurance company you find. Get quotes from several companies to compare rates and coverage options. Visit the websites of the different companies and seek out their customer reviews and ratings.
- Increase your deductible: A higher deductible can lower your premium. Just make sure you have enough savings to cover the deductible in case you need to file a claim.
- Bundle your policies: Using one insurance provider for all your multiple insurance policies such as auto insurance and homeowners insurance would most often result in a discount.
- Improve your home security: Installing a home security system, CCTV, deadbolts or smoke detectors can make your home less risky to insure, and may result in lower premiums.
- Maintain a good credit score: Insurance companies often use credit scores as a factor in determining rates, so it’s important to maintain a good credit score.
- Ask about discounts: Some insurance companies would likely offer discounts for things like being a non-smoker, having a new home, or having a good claims history.
- Consider a higher liability limit: A higher liability limit may provide more protection in case of a lawsuit, but may also increase your premium.
Remember, the most important thing is to make sure you have enough coverage to protect your home and belongings in case of a disaster or other unexpected event.
Types of homeowner’s insurance policies
HO-1
Homeowner-1 is a basic type of home insurance policy that provides coverage for a very limited number of perils, such as fire, lightning, windstorms, hail, explosions, riots, and theft. HO-1 policies normally would provide coverage for the dwelling itself, as well as personal property within the home, but only against the specific named perils outlined in the policy. This means that if your home is damaged by a peril not outlined by the policy coverage, you will not receive any reimbursement.
HO-1 policies do not cover liability protection, which can be a significant risk for homeowners. Liability protection covers you if someone is injured on your property or if you cause damage to someone else’s property. HO-1 is no longer commonly offered by insurance companies because of its very limited coverage.
HO-2
Homeowner-2 policy provides a little of a more comprehensive coverage than HO-1, and covers a wider range of perils, including damage caused by falling objects, freezing, and water damage. The perils covered by this policy will be outlined in the policy agreement; any peril not listed will not be covered.
The perils typically covered under an HO-2 policy include:
Fire or lightning
Windstorm or hail
Explosion
Riot or civil commotion
Damage caused by aircraft or vehicles
Smoke
Theft
Vandalism or malicious mischief
Volcanic eruption
HO-3
Homeowner-3 policy is the most common type of homeowner’s insurance policy; it is often referred to as a “named peril” policy, which means that it only covers the perils that are specifically listed in the policy. It covers the physical structure of the house as well as the contents inside against all perils except those specifically excluded in the policy.
The policy provides coverage for the homeowner’s dwelling and other structures, such as a garage or shed. It also covers personal property, including furniture, clothing, and other items within the home. In addition, the policy includes liability coverage, which provides protection in case someone is injured on the homeowner’s property.
Examples of perils that may be excluded include: damage caused by floods, earthquakes, and other natural disasters. Homeowners who live in areas prone to these types of events may need to purchase additional coverage.
HO-4
This policy is commonly known as renter’s insurance, it is designed for those who rent their home or apartment. It provides coverage for renters or tenants of an apartment or the contents inside the rental property, but not the physical structure of the building.
The HO-4 policy coverage typically includes the following:
- Personal Property: This covers your personal belongings such as furniture, clothing, electronics, and other items that you own in case they are damaged, destroyed or stolen.
- Liability: This coverage pays for damages or injuries that you may be held responsible for. For instance, if you host a party and one or some of your guests gets hurt while in your rented home or apartment, the liability coverage will help cover the costs.
- Additional Living Expenses: This covers the cost of temporary living expenses if your rented apartment becomes inhabitable or if you are forced to vacate your rental property due to damage caused by a covered event such as a fire, water, rodents or a natural disaster.
HO-5
It is also known as a comprehensive form policy.Homeowner-5 policy provides the broadest coverage of all homeowner’s insurance policies and covers the physical structure of the house and the contents inside against all perils, except for those explicitly excluded in the policy terms and conditions. This means that even if a specific type of damage is not listed as a covered peril, it will still be covered unless it is mentioned in the policy coverage as exclusive.
Characteristics of an HO-5 policy include:
- All-risk coverage: Unlike other policies that cover only specific types of damage, an HO-5 policy covers damage caused by any peril, unless specifically excluded.
- Higher coverage limits: HO-5 policies typically offer higher limits for personal property and liability coverage than other policies.
- Replacement cost coverage: The policy pays for the full cost of replacing damaged or destroyed property, rather than just its current value.
- Additional living expenses coverage: If you’re forced to temporarily relocate due to damage to your home, an HO-5 policy may cover your additional living expenses, such as hotel costs and meals.
- No depreciation: The policy does not take into account the age or condition of the damaged property when determining the payout amount.
An HO-5 policy may be a good option for homeowners who want more comprehensive coverage or who have high-value possessions that they want to protect. However, it may also come with a higher premium than a standard HO-3 policy due to the increased coverage.
Finally, it is very important to carefully review the policy documents to understand the specific coverage and exclusions of your homeowner’s insurance policy. The cost of the policy will depend on a number of factors, including the value of the property, the level of coverage selected, and the location of the property.
