The basics of homeowners insurance – Fox Business

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Homeowners insurance can help cover the cost of repairing your home if it’s damaged. Learn more about homeowners insurance basics. (Shutterstock)
Homeowners insurance is a product you never want to use, but will certainly be glad to have if you do. This type of insurance helps pay to repair or replace your home and property if it’s damaged in an unexpected event, like a fire, accident, or crime. If you have a mortgage, you’re likely required to have a policy, but homeowners insurance is a good idea even if it’s not mandatory. 
Let’s go over how homeowners insurance works, the different types of policies, and how to get a quote.
With Credible, you can easily compare homeowners insurance quotes from top insurance carriers.
Homeowners insurance is a policy that helps to restore, rebuild, or replace your home and property should they suffer damage in an unforeseen circumstance, called a peril. Your homeowners insurance policy has other coverage features as well, including paying to cover your legal expenses if someone injures themselves while on your property, or if you’re sued.
Like most types of insurance, you pay a monthly or annual premium to an insurance company for your policy — some carriers even let you pay quarterly or semiannually. If your home or property is damaged, you file a claim to receive a payout.
If you have a mortgage, you may not realize that you’re paying a homeowners insurance premium. In most cases, lenders require you to pay for homeowners insurance as part of your monthly mortgage payment. The lender holds the money in an escrow account and handles the payment for you.
The type of homeowners insurance policy you need depends on the type of home you live in and how broad you’d like your coverage to be. Keep in mind, the more coverage you have in your policy, the more expensive your premium tends to be. 
Here are the eight basic types of homeowners insurance:
Basic form is a type of bare-bones homeowners insurance policy. These policies are relatively uncommon, with insurance companies generally offering more comprehensive policies. With HO-1, you’ll only be covered if your home or property is damaged in a limited number of events, including:
Broad form offers more coverage than basic form. With HO-2, you receive coverage for everything included in HO-1, plus a few other common ways your home can be damaged. The additional covered perils include:
This type of policy is the most common form of homeowners insurance. The two previous types of policies only cover a certain set of circumstances. HO-3 covers all types of perils, except for cases that are spelled out as exclusions. Common exclusions are earthquakes, flooding, and nuclear accidents.
These policies cover people who rent their homes rather than own them. Under tenants broad form insurance, only your belongings are covered. Your landlord will likely have a homeowners insurance policy that covers the structure of the home. An HO-4 policy covers you for the same perils as HO-2 policies.
HO-5 policies represent the broadest type of coverage, but are also among the most expensive. You’re covered for all perils except for those specifically excluded, but the exclusions on HO-5 policies are fewer and more narrow than other policies. Exclusions usually include floods and earthquakes.
If you own a condo unit, you’ll want to have an HO-6 policy. This insurance primarily covers your belongings but also protects the interior of the unit. The policies don’t cover the structure of the building, which is usually owned by the condominium association.
This type of insurance is specifically for mobile homes and similar homes. An HO-7 policy will typically cover the structure of the building, your property and belongings, and any legal liability that arises if someone injures themselves while on your property. 
HO-8 policies are generally used to cover older homes. In these cases, the cost to replace the home would be more than the home is actually worth. Like HO-1 and HO-2 policies, this type of insurance generally only covers perils spelled out in the policy.
A standard homeowners insurance policy offers a variety of different coverages. Depending on the circumstances or how your home and property are damaged, you may need to draw on different elements of your homeowners insurance policy. Typical policies include:
Visit Credible to compare homeowners insurance quotes from various insurance carriers.
The dollar amount of coverage isn’t the only thing to consider when shopping for a homeowners insurance policy. Policies with the same coverage limits may have different levels of coverage, which dictate how your claim is handled. 
Here’s an explanation for some of the more common levels of coverage. The following generally refer to dwelling coverage and personal property coverage:
Any homeowners insurance policy you buy will have certain exclusions — things that aren’t covered. These can be different from policy to policy, so check the "Exclusions" section on your policy for a full outline of what isn’t covered. However, some standard exclusions are common to most policies, including damages caused by: 
Harm to your pets usually isn’t covered, and neither is damage to your car.
The amount you’ll pay for homeowners insurance will depend on the level of coverage you need, additional coverages you buy, and where you live. Nationwide, the average annual premium for homeowners insurance policies is $1,278 per year, or $106.50 per month, according to data from the National Association of Insurance Commissioners
Factors that affect the amount you’ll pay include:
Shopping around can help you get the best homeowners insurance policy for you at the lowest cost. To do that, you’ll need to get quotes from multiple insurers. Here’s how to get a homeowners insurance quote:
Estimate how much it would cost to completely rebuild your home and replace everything that’s inside. You can ask an insurance agent to help you come up with this figure. The replacement cost of your home is a good starting point to determine the coverage limits you need on your policy. 
Do some research on insurance companies. You can use a resource like Consumer Reports, which rates and reviews insurance companies. You may also be able to get a list of insurers in your area from your state’s department of insurance.
Get a rate quote for the coverage limit you determined in Step 1 from each company on your list. Make sure the rate quote you receive includes the coverage limits, your deductible, and the monthly or annual premium you’d pay. As you compare one quote to another, you want coverage limits, deductibles, and other features to be similar. 
Credible makes it easy to quickly compare homeowners insurance quotes from different insurance carriers.
Quotes displayed in real-time or delayed by at least 15 minutes. Market data provided by Factset. Powered and implemented by FactSet Digital SolutionsLegal Statement. Mutual Fund and ETF data provided by Refinitiv Lipper.
This material may not be published, broadcast, rewritten, or redistributed. ©2022 FOX News Network, LLC. All rights reserved. FAQNew Privacy Policy

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