Home insurance

From ArticleWorld

According to insurance companies, a standard Home insurance covers the house, garage and other structures on the property as well as personal possessions inside the house such as furniture, appliances and clothing against a wide variety of perils including windstorms, fire and theft. The extent of the perils covered depends on the type of policy. An all-risk policy offers the broadest coverage; it covers all perils except those specifically excluded in the policy.

The policy

Generally the amount agreed upon as the cover for home insurance is equal to or less than the principal of the mortgage or the loan amount. Certain claims such as earthquakes or floods are usually exempt but may be added on as extras for extra premium.

The insurance is typically for a period of time agreed upon by both the parties and is referred to as a term contract. The insured pays the insurer a fixed amount of premium at each term till the policy expires. Alternatively the house owner can opt for what is known as the perpetual insurance policy which does not ever expire. The rate of the premium agreed upon is low or high depending upon how secure the house is (fire alarms, burglar alarms etc.).

Types

In America there are various types of householder’s policies that can be bought at different prices. Before the 1950’s a home owner had to purchase several policies for different hazards like loss through fire or theft, but during the 1950’s a comprehensive policy cover was developed so that house owners needed to buy only one complete policy to take care of everything together.

By the 1970’s the policies were further streamlined and a simplified home owner’s policy was introduced in the market. This one policy has been amended several times so that now home owners have six comprehensive policies to choose from.