Monday, 13 May 2013

Purpose Of Having Homeowner's Insurance

                       Insurance is the equivalent transfer of the risk of a loss, from one identity to another in exchange for payment. Home insurance is also called as homeowner's insurance or hazard insurance.
Your home is likely to be one of the largest single purchase you will ever make. Because your home is an expensive and an important purchase, it needs to be protected from different types of trouble. But owning your own home is not everything, homeowners must know how to insure it. Most of the new homeowners don't know what the insurance covers or the limitations on their policies mean, and find themselves without the coverage they thought they had, when they need it the most.  Knowing the purpose of homeowners insurance, what it does or what doesn't cover, can help you make few decisions about how you can protect your property and cut useless expenses. 


                    There are two very important things a home owner needs to know before going for homeowner's insurance those are :

  • The difference between replacement cost insurance from the actual cash value insurance. The replacement cost insurance pays the same amount of restoring the home to its pre condition or to build you a new home and contents of equal value and there is no reduction in the value of assets according to there use or wear and tears of the home. 
  • The less likable insurance is actual cash value that will pay you an amount equal to the replacement value of the damaged property minus the value of assets according to there use or wear and tear. In essence, you won't get your whole home back in this insurance. 


                                There are few different kinds of insurance referred to as homeowner's insurance but for most people, there are three main concerns:

  • Protect your home.
  • Protect your personal property.
  • Provide liability coverage.
Most homeowner's purchase a policy referred to as HO-3, which is a unique type of home insurance that includes open perils protection. Open perils protection covers all direct physical losses to your house and lists specific exclusions. All insurances exclude certain types of damage, including damage caused by law (problems caused by lack of proper papers), war, nuclear accidents, earthquakes, floods, power failure, neglect and intentional loss. Although HO-3 excludes these perils as a general rule, coverage for some of these specific perils may be added separately to the policy. HO-3 coverage is generally recommended as a minimum level of homeowners insurance. 

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