Insurance description
Home insurance, or homeowners
insurance, is an insurance policy that combines various
personal insurance protections which can include losses
occurring to one's home, its contents, loss of its use
(additional living expenses), loss of other personal
possessions of the homeowner, as well as liability
insurance for accidents that may happen at the home.
The cost of homeowners insurance often depends on what
it would cost to replace the house and which additional
riders—additional items to be insured—are attached to
the policy. The insurance policy itself is a lengthy
contract, and names what will and what will not be paid
in the case of various events. Typically, claims due to
earthquakes, floods, "Acts of God", or war (whose
definition typically includes a nuclear explosion from
any source) are excluded. Special insurance can be
purchased for these possibilities, including flood
insurance and earthquake insurance.
The home insurance policy is usually a term contract—a
contract that is in effect for a fixed period of time.
The payment the insured makes to the insurer is called
the premium. The insured must pay the insurer the
premium each term. Most insurers charge a lower premium
if it appears less likely the home will be damaged or
destroyed: for example, if the house is situated next to
a fire station, or if the house is equipped with fire
sprinklers and fire alarms. Perpetual insurance, which
is type of home insurance without a fixed term, can also
be obtained in certain areas.
In the United States, most home buyers borrow money in
the form of a mortgage, and the mortgage lender always
requires that the buyer purchase homeowners insurance as
a condition of the loan, in order to protect the bank if
the home were to be destroyed. Anyone with an insurable
interest in the property should be listed on the policy.
|
