What Is Usually Covered in a Homeowner's Insurance Policy?

Homeowner's insurance insures your house, contents and outbuildings for covered losses. Covered losses vary from one policy to another. General standards approved by state legislatures and set by state insurance commissions control the coverage within the boundaries of the state. Three basic insurance policies cover most homes in the U.S.: HO-1, HO-2 and HO-3. More numbers and policies exist, but these are the common ones.

HO-1 provides the least coverage for your home, with fewer perils covered than the other policy forms. The key to HO-1 is that it names the perils covered, with all others excluded. Few insurers sell this policy, reports the New York Insurance Department, because insurers choose to sell policies that are more comprehensive. HO-1 covers fire, lightning and smoke damage, wind storm and hail, burglary and theft, explosion, glass breakage, vehicle or aircraft damage, riot and civil commotion, vandalism and malicious mischief, bodily injury, damage to property of others, civil judgments, medical payments, personal property at home and away and additional living expenses.

The HO-2 form covers all of the perils covered in HO-1 and adds several others. Weight of ice and snow or falling objects, water from plumbing systems, freezing pipes, rupture of water heaters and heating systems and electrical damage to appliances are covered perils in the HO-2 policy. You may not have noticed this coverage did not exist in HO-1 coverage when reviewing that policy, but you would miss it in case of a claim.

The HO-3 homeowner's insurance policy covers everything the insurer does not exclude. This gives you the most insurance, but the cost may be more than the basic coverage of HO-1 or the additional coverage provided by HO-2. HO-3 excludes flood, earthquake, war and nuclear accidents. Home contents have the same exclusions. Some HO-3 policies have other exclusions specified and approved by the state insurance department. Review the policy carefully for exclusions approved in your state.

Other Forms
Some states, such as Texas, have hybrid policies approved by the state insurance commission. In Texas, these include HO-A, HO-B and HO-C. According to the Texas A&M University Real Estate Center, the HO-B policy offers more protection than the HO-3 and includes hail damage, foundation damage and water damage as well as some mold coverage if caused from leaking water. HO-4 is renter's insurance, and HO-5 is a comprehensive homeowner's policy. Contact your state insurance department to determine how your state's homeowner's insurance coverage compares with the standard policies.
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How Does Homeowners Insurance Work?

The Basics of Homeowners Insurance
When you purchased your home, you were required to purchase homeowners insurance in order to receive financing. Understanding this coverage will help you make the most of your policy if you should ever need to make a claim. Homeowners insurance policies are labeled based on how much coverage they offer. The three types of homeowners insurance policies are HO-1, HO-2 and HO-3. HO-1 and HO-2 policies are the more affordable options, but they only insure the property, not the individual's belongings, and they carry many exclusions. Most policies are HO-3 policies because they cover both the house and the belongings it contains.

Property Protection
HO-3 polices are divided into two basic parts: property protection and liability protection. Property protection covers four main items. First, it covers the dwelling itself, which includes your house and any attached structures. Other structures on the property, such as a storage shed, are also covered. Your personal property is another part of this coverage. Some policies will reimburse the actual value of the property, while others will provide the replacement cost if property is damaged, regardless of any depreciation. Some policies will also cover the loss of very valuable items, like jewelry, even if there was no catastrophic event. Finally, if your home is damaged and you cannot live there while it is repaired, your living expenses will be covered under property protection.

Types of Damage Covered
The property portion of the homeowners insurance policy will cover damage caused by storms, ice, snow, fire, theft and vandalism. Damage caused by pipes that burst or other accidental malfunctions within the home are usually covered, provided there is no sign of neglect on the part of the homeowner. Homeowners insurance policies often have a deductible that the homeowner has to pay before coverage is available. Typical policies do not cover damage caused by floods, hurricanes and earthquakes. Homeowners who live in areas at risk for these types of damage can add these coverage options for an additional cost.

Liability Protection
The second part of the policy, the liability portion, covers you against claims made by others who are injured on your property. For example, if you are having a party and one of your guests is injured while at your home, the medical bills that the guest has will be covered by your homeowners insurance policy. However, if you neglect your property and someone is injured as a result of your negligence, you will be liable for those injuries.

Filing a Claim
If you suffer a loss that is covered under your insurance policy, you will need to file a claim to receive your money. Your insurance company will then send an adjuster to confirm that the value you stated on the claim is accurate. Having pictures or other records to prove the value of your belongings will help you receive all that you are owed. Once the value of the damaged property has been assessed, you will be offered a settlement amount. You can negotiate this if you feel that it is not sufficient to cover your losses.
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How to Compare House Insurance Quotes

Follow this guide to learn how to compare house insurance quotes.

1. The first step in comparing house insurance quotes is to decide what exactly you want in your insurance to cover. Think about the area you live in, and the types of hazards your home will face - things such as flooding, earthquakes or other natural disasters should be noted in your coverage. Another thing to consider is what type of damage coverage you would like as well. All of these factors will help determine the final cost and type of coverage you will have in your plan.

2. The second step in comparing house insurance quotes is to decide which company's interest you the most. The best place to start the search for insurance providers is an internet search for your area, or just by opening up your newspaper and seeing who is advertising locally. By choosing a local provider, you are ensured that these companies will already be familiar with your specific environment, and possibly have better rates than a larger company.

3. The third step in comparing quotes for house insurance is very important - finding out your status as a consumer. Think about things such as your credit score - is it high with little marks against is, or low and full of inconsistent payments and delinquent accounts? Also, consider the type of area you live it - how is the crime rate, and is the area a known target for natural disasters such as hurricanes or tornados? All of these items will factor into your house insurance quotes.

4. The final step in comparing insurance quotes for your house is to just shop around. Think about buying insurance like you would buy a car - you wouldn't buy the first car you see, so don't settle with the first company you get a quote from. The easiest way to go about finding quotes is to use the internet, as you can see multiple quotes in a little amount of time, and shop without feeling any pressure from salespeople. Once you find a few companies that have quotes in your price range, then it is time to contact each provider individually to discuss the quotes in more detail. Remember that this industry thrives on competition, and so use this to your advantage. When contacting the individual companies, make sure to that your provider knows that you are comparing their auto insurance quotes with other policy providers who offering something similar, as doing this could help get you a lower quote.
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How to Rate an Insurance Agent

It happens too often when we find a personable insurance agent, that we throw all of our trust into the relationship without discerning whether or not the agent deserves that trust. In order to get the right guidance when it comes to choosing our insurance, we must scrutinize the agent trying to sell us that insurance. Read these tips below to learn how to rate your insurance agent.

Instructions for you:

1. Pay attention to how your insurance agent describes bonuses or lump sums that are paid when policies mature. A good agent explains that the bonus is not guaranteed and it usually depends upon whether or not the company was profitable during any given year.

2. Remember that insurance agents make substantial commissions on policies they sell you. A trustworthy agent should advise you to seek the advice of an independent financial planner before purchasing any policy. Only then can you be sure your insurance agent is not motivated by greed.

3. Expect an honest insurance agent to explain how your car gets valued if it's been totaled. Insurance companies don't just fork over the total amount that you paid to buy your car. Instead, they use value books--like the Blue Book--, market research on car values in your locality and quotes from other vendors.

4. Ask your insurance agent what happens to your premium once you've made an at-fault claim. A good agent must state that his auto insurer can raise your premium by up to 40 percent.

5. Find out if and how your insurance agent reminds you when premiums are due. A good agent mails out friendly reminders or has his staff make phone calls to his clients.

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The Definition of an Insurance Quote

Consumers purchase insurance policies to protect themselves against a loss. Policies may be purchased to pay for damage to a home or car, for medical expenses, or for loss of life. Insurance agents provide insurance policy quotes to potential customers to disclose the costs and terms of purchasing an insurance policy from their respective company. In most cases, the higher the risk of loss, the higher the cost of the insurance.

Types of Insurance Policies
The type of insurance policy a consumer needs will dictate the type of insurance quote he or she receives. Quotes are provided by insurance professionals who are licensed to sell property and casualty, life and health, and personal lines insurance policies. Consumers purchase property and casualty insurance policies to protect assets such as an automobile or a home. To supplement medical expenses, health insurance coverage is available. Life insurance policies protect families financially in the event of a loved one's death.

Information Gathering
Insurance agents must gather important personal information about a potential customer to determine the level of risk they will be assuming by providing an insurance policy. In a homeowner's or auto insurance quote, it is necessary to obtain information regarding previous claims filed by the insured for incidents such as theft, auto accidents or fire. Financial responsibility information such as credit and work history is being used more and more in insurance quotes. It may be necessary for an insurance agent to gather a client's date of birth and Social Security number to provide a quote.

Client History
A client's history is a major part of the quoting process and will help determine the price and terms of the insurance policy. Driving history plays an important role in an auto insurance quote because it gives the agent an indication as to the type of driver a potential client is. The more risk a driver is willing to take, usually the higher the insurance premium will be. Life insurance quotes require obtaining information regarding the client's medical history, current medical condition, lifestyle, occupation and any extra-curricular activities that are considered dangerous or life-threatening.

The underwriting process of an insurance quote takes into consideration factors that determine the amount of risk the insurance company will take on by offering a policy to a potential customer. Underwriters calculate the possibility of risk by assessing certain risk factors. Some risk factors include the client's age, driving record, credit history, medical condition and previous insurance claims filed. Most insurance companies have strict underwriting guidelines to assume only the level of risk they are comfortable with.

Insurance quotes are not the same as insurance policies. Quotes are non-binding, which means that both parties, the insurance company and the consumer, are under no obligation to perform any duties as a result of having provided or received a quote. Quotes are for informational purposes only. A quote can turn into an insurance contract when both parties agree to the terms of the policy. This requires a company agreeing to provide an insurance policy and the consumer agreeing to pay the necessary premiums to keep the policy active.

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Buying Insurance With and Without an Agent

As a U.S. consumer, you have a broad insurance market available from which to make choices on coverage. Options for purchasing insurance direct from the company or with an agent are readily available to all who have Internet access and a telephone. When deciding how to approach buying insurance, look at what methods will work best for your situation. Buying through a licensed agent is a bit different than buying without the assistance of a knowledgeable representative. Either method has advantages and disadvantages, and which way to go depends on your personal preference.

Instructions for you:

1. Consideration
Insurance companies with top ratings advertise the grade repetitively. In a competitive market several top quality insurance companies are readily available to consumer access and will provide requested information. Purchasing insurance without an agent is fairly easy with most major companies, and you can request information via the Internet, telephone or postal mail. Premium costs may be somewhat lower buying direct as the company does not have to incorporate the costs of the commission paid to the sales agent.

2. Convenience
Some buyers find it more convenient to shop from home. With Internet access, you can compare companies and policies, complete an application and pay premiums, all from the comfort of an easy chair. Using this method to purchase insurance will require you to conduct your own research and evaluate your personal insurance needs.

3. Personal Service
Buying insurance with an agent provides you with direct personal service. Many local agents live and work in the community they service. Buying through a licensed agent gives you an opportunity to explain your individual needs and purchase policies tailored to your specific circumstances. For example, a motorist who needs auto insurance will have a professional to explain what state laws require and what is recommended to protect assets. The coverage can be individualized to fit your routine.

4. Selection
Buying insurance without an agent will require you to choose among a considerable number of companies to find products that suit your individual needs. Contrastingly, using the services of an agent to purchase insurance can limit the products available. For example, often an insurance agent will represent a sole company or a small family of companies. An independent agent often represents a larger group of companies and products, but this varies from agency to agency.

5. Discounts
Agents can provide discounts upfront for buying multiple policies. For example, packaging homeowner's insurance, auto insurance and life insurance through the same company qualifies most policyholders for a discount on premiums. In addition, some agents provide a further discount on costs by willingly relinquishing a portion of their commission in order to sell an additional policy. Buying direct from the company without the assistance of an agent may also produce discounts if you choose a provider that offers a range of products.
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How to Buy Auto Insurance Online

Shopping for insurance online can be an easy way to compare policy premiums. Insurance companies have made it simple to get rate quotes and purchase policies through the web. However, it's important to understand your state's requirements and individual needs when purchasing a policy online.

Instructions for you:

1. Know your state's requirements. Each state's minimum requirements for auto insurance vary. At a minimum, they require you to carry liability coverage on your vehicle. A list of each state's requirements can be found at Edmunds online.

2. Determine how much coverage you will need. An individual's needs will vary, but generally speaking you will want to purchase $50,000 in bodily injury and $25,000 in property damage. If you own a home, you may want to consider increasing your limits to protect your assets.

3. Review your current policy limits. If you are happy with your current limits, use these limits when purchasing an auto insurance policy online.

4. Review quotes online. Companies like InsWeb offer online quotes from several insurance companies at once. This tool will save you the time of filling out several quotes. However, if you are more comfortable, you can visit leading companies such as State Farm Insurance, AllState and Progressive online for direct quotes.

5. Compare the quotes side by side. Once you have your quotes together, compare the premiums side by side to determine the best deal.

6. Check the department of insurance. Before purchasing an auto insurance policy online, it's wise to check with the state department of insurance for complaints. This will allow you to observe how the company resolves complaints.