Homeowners Insurance (HOI) is a type of property insurance that involves the coverage of losses incurred to the house of the owner and the belongings inside that property. It also includes coverage against the accidents that may occur inside the house/residence or on the property of the homeowner. Before you end up thinking about buying a house, you must start with planning your finances. This is important because your finances must involve the premium that you will pay on your insurance. You might want to research around you and look into your state requirements about homeowners insurance. If you legally own a house and have no payable mortgage on it, then you do not have to have homeowners insurance. But if you have a mortgage, most likely your lender will ask you to acquire homeowners insurance. Since you are probably planning on getting a mortgage, it is necessary that your provider knows that you are planning your disaster management accordingly in case of an unpleasant event.
Now that you have decided on your finances and bought a house (Hooray!), it is time for you to acquire homeowners insurance. The process of buying a house and acquiring a policy progresses simultaneously with each other. For obvious reasons, you want your premium to be as low as possible. (Note: Premium is the amount you pay each month on your policy to the insurer) There are numerous factors that affect the amount of your insurance. The location of your house and the state you live in has a huge impact on your premiums. The type, age, and other characteristics such as roof, garage, built-type and materials used are also common factors considered on your premiums. An older house would have a higher premium since it will cost more to fix. The protection provided inside and to your house such as alarm system, sprinklers, and smoke detectors can also lower your premium since it lowers the risk to any damage to your house. Your history of damage claims and your credit history also have an effect on your premiums; a good history and credit will obviously lead to a lower premium. Keeping a higher deductible amount on your policy will also lead to a lower premium amount.
Now you have to know the things that your house contains in order to settle a claim in case of an accident or any loss or damage to your house. This is achieved by keeping an inventory. This sounds exactly like it seems. You need to grab a paper and a pen, walk around the house and list all the things that are present in your house regardless of their size or value. It is better to organize your inventory by room so that you can know which object was present in a particular room. You may also want to add an estimated value column and a purchase date to ensure that the inventory contains some information and does not seem vague or fake. Once you have completed the inventory, make sure that you make copies of it and store it at different places or with other people such as your friend or family so that you can recover it in case of any claim.
There are different types of homeowners insurance Texas policies that are pretty much standard throughout the country although some insurers may also offer a variant policy to a standard one. Homeowners insurance throughout the country covers 16 disasters or perils that may incur damage to the house or property. These perils as listed by Insurance Information Institute(iii.org) are as following:
LIST OF PERILS
1. Fire or lightning
2. Windstorm or hail
4. Riot or civil commotion
5. Damage caused by aircraft
6. Damage caused by vehicles
8. Vandalism or malicious mischief
10. Volcanic eruption
11. Falling object
12. Weight of ice, snow or sleet
13. Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance.
14. Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire-protective system.
15. Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance.
16. Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component)
17. All perils except flood, earthquake, war, nuclear accident, landslide, mudslide, sinkhole and others specified in your policy. Check your policy for a complete list of perils excluded.
A. HO-1: Limited CoverageWith respect to these perils, the following standard policies apply to homeowners:a
- Covers the top ten perils listed above. It is no longer available in most states.
B. HO-2: Basic
- This policy covers all the perils listed above. Mobile homes are covered from this policy as well.
C. HO-3: Extensive (Also the most popular)
- This provides coverage against all perils as well as all liabilities that may occur on the property as well as inside the house
D. HO-8: Older Homes
- For older homes, the policy needs to be changed since the reimbursement occurs on an actual cost basis. This means that the depreciated amount is deducted from the actual amount to provide the final reimbursement
This is the basic layout and information that all homeowners must need to know before buying an insurance policy. It is recommended that you retain your policy even after you have paid off your house and you are not required by a lender to acquire insurance. Home security should remain a top priority and since there is no guarantee of security, it only makes sense that you remain prepared for any and all kinds of disasters to come.