 Sam
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 Posted: Thu Aug 18, 2005 4:18 am Post subject: Homeowner's Insurance |
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Homeowner's insurance or Home Insurance is an insurance policy that protects a homeowner from financial loss due to physical damage by natural disasters like fire, storm etc and legal liability imposed upon him in relation to bodily injuries or any sort of damage to the property of another individual.
Home insurance is a combination of hazard insurance and liability insurance.
- Hazard insurance or Home Hazard Insurance:
This insurance policy covers up financial losses due to physical damages of the property by natural disasters like storm, fire and earthquakes. Often insurance for protection against flood, that is, flood insurance is included in this kind of policy.
- Liability insurance:
It includes insurance to protect an individual against claims accusing him of negligence that has resulted in property damage or bodily injuries.
For example, suppose Harry owns a home worth $1,00,000 and due to fire, he suffered a loss of property worth $3000. Now if he had made the homeowner's insurance policy then it would pay him the required amount to make up for the loss.
Features:
- The insurance premium is paid into the escrow account along with the monthly mortgage payment to protect a lender from financial loss.
- The insurance company often pays the actual cash value of the damaged property. If the policy covers the personal property for its actual cash value, then the insurance includes the present market value of the personal property less any depreciation. In this case, the amount of insurance often becomes less than the amount required to replace the damaged property.
- You may not receive the cost of replacement of the damaged property with depreciation but certainly a maximum dollar amount.
- The insurance may also cover replacement cost of the damaged property, that is, the total payment made by the insurance company will include the total cost required to repair or replace the property without considering any depreciation.
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