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June 13, 2019

What you need to know about home insurance

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A home insurance policy is an important consideration for your new house.

Home insurance is an important consideration when you move into a new house. Not only does it help protect you financially when your house and the items within it suffer covered damages, it's also often a requirement when purchasing a home with a mortgage. Let's look at some of the most important details about home insurance.

A close up of a person's hand signing a home insurance policy.A home insurance policy offers valuable protection to the house itself as well as the possessions inside.

What is homeowners insurance?

While you may see this type of protection called home insurance or homeowners insurance, these names refer to the same thing: An insurance policy that, depending on specifics, can protect the home structure itself, items contained inside and other structures on the same property, and also cover other concerns such as loss of use due to damage and injuries to guests and others. Homeowners insurance offers peace of mind when a disaster covered by the policy strikes. The type of event that triggers the policy often comes with danger and there's usually a following period during which repairs need to be made, items need to be replaced or, in the case of liability, a court case must progress. However, the lack of a policy in these situations can easily lead to higher costs, less-stable living conditions and greater liabilities.

What types of home insurance are available?

There are eight specific policy types in the world of home insurance, as Insurance Blog by Chris pointed out. Not all of these are relevant to owners of traditional, standalone homes. There are individual policies for mobile homes as well as condos and renters. There is also a policy specifically designed for older homes. The four policies that don't fall into these categories are:

  • HO-1: A basic form that offers a low cost, but with coverage limited to specific types of damage, called perils, listed in the policy.
  • HO-2: A broad form that covers more perils, but uses the same format as the HO-1 policy - if the peril isn't listed, your home won't be protected from it.
  • HO-3: A special form that takes an exclusionary approach. If your policy doesn't list a peril as excluded from coverage, you're protected from it. This policy is often seen in a positive light due to an effective mix of coverage and cost.
  • HO-5: A comprehensive form that offers the broadest form of protection. It uses the same exclusionary model as the HO-3 policy but generally lists fewer perils. However, it also carries a higher cost.

What else should I keep in mind?

Riders are additions to insurance policies that modify them in some way. Depending on the insurer you choose, you may be able to add a rider that specifically protects high-value items such as jewelry, for example.

Flood insurance is a separate program from regular home insurance and is managed in part by the federal government, as FEMA explained. You may be required to buy flood insurance if you live in a flood-prone area.

The best way to make a move to a new home with an insurance policy ready to go into effect is to work with professional movers and packers. To learn more, get in touch with your local Atlas agent today!