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Home is where heart is. Most of us spend most of our life’s earnings to build a home which is the abode of love and everlasting happiness. Yet an unfortunate and sometimes freaky accident can break our home, happiness and dream forever. While no one plans an accident, one could have a protection plan for the home and all its contents. The charm of the future is that it is unknown – and there lies its unpredictability also. We never know what might happen tomorrow.
A few of the essential points related to standard homeowners insurance are:
It covers your property from damage caused by natural disasters, accidents, theft and burglary.
It covers you and your family members for any injury or property damage which you might cause to other people.
You have to buy two separate policies for coverage against flood and earthquake.
Maintenance-related damages are the exclusive concern for the homeowner.
Standard homeowners insurance can provide four types of coverage:
Structural coverage
Coverage for your personal belongings.
Liability protection
In the event of a fire or a similar disaster requiring you to stay outside your home, you can get coverage for the ‘additional’ living expenses.
The various types of homeowners’ insurance policy follow more or less standard guidelines across the country. The names may slightly be different like ‘standard’ or ‘deluxe’. Texas is the only state where the homeowners insurance is slightly different from other states. Fire & lightning, Windstorm or hail, explosion, riot or civil commotion, damage caused by aircraft, damage caused by vehicles, smoke, vandalism, theft, volcanic eruption, weight of snow, ice or sleet, damage caused due to malfunctioning of water system, air-conditioning system, plumbing system are some of the areas which you can seek cover from in the homeowners’ insurance policy.
One of the best coverage you can get amongst all the homeowners’ insurance policies is the HO-3. If you are the owner and have renters also living in the same premises, you can get coverage for this aspect also. Residents of multi-family homes usually take the HO3 policy for getting full coverage. Then there is the HO-8 policy which is exclusively for older homes. This policy reimburses you on an actual cash value basis – which is the replacement cost less the value for depreciation. The H0-6 policy is applicable when you are living in a condo or a co-op. This policy offers coverage for your personal belongings and the part of the building which you own. It also offers protection for the common 16 disasters or accidents as applicable for other policies.
With regard to the level of coverage which you can avail of in the homeowners’ insurance policy, you essentially have three options:
You can opt for actual cash value where the policy reimburses you the cost of replacement of the damaged section, less the cost of depreciation.
Replacement cost. In this option, the policy pays back the entire cost of rebuilding or repairing your home without any depreciation cost.
Guaranteed or extended replacement cost. This type of policy reimburses the highest amount. This is a guarantee to pay whatever it would have cost you before the accident took place, to rebuild your home. This policy can protect you against sudden inflation in the cost of building materials, due to any shortage, etc. This policy however will not pay you for any upgrading of the house. For this, you have to procure an addition to your policy called the Ordinance, which will help you pay for the additional costs
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