NOTE: This site contains information believed (but not guaranteed) to be accurate at the time of writing. We do NOT offer or provide financial or legal advice. Always consider obtaining professional advice before purchasing any insurance product.

FAQ

Answers to some frequently asked questions about home insurance.

What is home insurance?

Home insurance is insurance that provides financial protection against disasters. It typically consists of two parts. The first covers damage to your property (both the structure of your home, and your personal belongings), and the second provides personal liability coverage.

Homeowners insurance is often required by lenders as a requirement for obtaining a mortgage.

If you do not own your home but rent it, you can obtain renters insurance that provides coverage for your personal property, as well as personal liability coverage.

What types of home insurance are available?

There are seven basic types of home insurance policies, known as HO-1 through HO-7, that cover different perils. (NOTE: Always check the terms and conditions in the insurance policy to see what is and isn't covered by that particular insurance!)

HO-1. Covers your dwelling and personal property against losses from the following 11 types of perils: fire or lightning, windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, vandalism or malicious mischief, theft, damage by glass or safety glazing material that is part of a building, and volcanic eruption.
HO-2. Covers your dwelling and personal property against the 11 perils listed under HO-1, plus six more: falling objects; weight of ice, snow or sleet; three categories of water-related damage from home utilities or appliances; and electrical-surge damage.
HO-3. Covers your dwelling and personal property against the 17 stated perils covered under HO-2, plus any other peril not excluded in your policy; it does not cover flood, earthquake, war and nuclear accident. (HO-3 is often called "broad-risk form" because it covers everything except the exclusions outlined in the policy.)
HO-4. Renters' coverage. Similar to HO-2, but it covers only personal property against 17 listed perils.
HO-5. All risk coverage for building and personal property. This policy form isn't sold very often anymore.
HO-6. Condominium owner coverage. Covers personal property from 17 listed perils, plus certain building items in which the unit owner might have an insurance interest.
HO-7. Similar to HO-1, but it covers repairs or actual cash values, not rebuilding costs. This is for homes with replacement costs significantly higher than their market values.

According to the National Association of Insurance Commissioners, more than 80% of homeowners have an HO-3 policy.

What about floods and earthquakes?

Floods and earthquakes are not covered by standard home insurance. If you need coverage for these events, you must buy a separate (additional) policy or a "rider".

What is Actual Cash Value?

Actual Cash Value (or ACV) is coverage that will pay only for what your property was worth at the time it was damaged or stolen (minus your deductible), not the amount you would have to pay to replace it.

What is Replacement Cost Coverage?

Replacement Cost Coverage will pay for what it actually costs to replace the items you lost (minus your deductible). It will cost you more in premiums, but it will also pay out more if you ever need to file a claim.

With Extended Replacement Cost, your property is covered up to a specified amount or cap.
With Guaranteed Replacement, there's no cap or maximum pay-out amount.

The second type of coverage may cost more, but it provides the most protection.

• Homeowners Insurance
• Renters Insurance