Home Insurance 2023

What is Home Insurance?

Home insurance is a form of real estate insurance designed to cover losses and different kinds of damages to an individual's property. That is, HOI provides homeowners with financial protection in case of an accident or disaster involving their houses and belongings. Home insurance policies come in several forms or types, which you should know about before buying a quote:

HO-5 or comprehensive form

The HO-5 insurance offers the most extensive coverage and pays for almost all damages and losses related to your property. The exclusions are listed in your policy. But traditionally, this form is considered all-risk. However, not all home insurance companies are willing to give it to you if you live in dangerous areas.

HO-3 or special form

This is the most popular type of home insurance, which provides rather extensive coverage on greater items, such as the house itself, and basic coverage on a number of other items indicated in your policy. This insurance form is usually needed to be eligible for a mortgage.

HO-1 and HO-2 or basic form

HO-1 and HO-2 are the simplest types of home insurance which cover the smallest number of items spelled out in your policy. This form is best suited for owners of seasonal camps and cottages. Although the insurance is the cheapest, you still run a financial risk in case of severe home damage.

What does Home Insurance Cover?

It is interesting to know that the predecessor of home insurance was fire insurance, the purpose of which comes from the name itself. But with time, this compensation option evolved to meet the craving of homeowners to feel safer. So now, every US resident can insure their possessions in the event of a variety of unpleasant situations. But what does the HOI policy cover? Let's figure it out.

Dwelling

Dwelling coverage pays for the damage to the house structure, including the roof, walls, windows, and floors. The home-attached structures are covered too. For example, if you have a deck, garage, or porch, these items will fall under the policy. The insurer will provide you with financial assistance in case your home is damaged by fire, hail, lightning, frosts, wind, and so on.

Other structures

The coverage insures stand-alone structures located on the territory of your house, for example, a shed, detached garage, or fence. It works just like the dwelling coverage, paying for an extended list of damages to your property. For example, if your fence breaks down due to strong winds, the insurer will compensate you for the cost of its repair.

Personal property

This is a popular type of coverage that refers to your belongings – electronic devices, clothes, appliances, furniture, and so on. Besides, home insurance covers your property not just in your house but anywhere. And the perils that fall for the coverage typically include:

• Hail, windstorms, frosts, and snow
• Lightning and fire
• Theft
• Acts of vandalism
• Power surge damage
• Explosions
• Volcanic eruption
• Water damage
• Damage caused by aircraft or vehicles

Loss of use

Loss of use coverage will come in handy for those whose home is uninhabitable due to a disaster. Thus, an insurance company will cover all the living expenses while your house is undergoing repairs. This includes restaurant meals, staying in a hotel, and many other costs related to living somewhere else. Keep in mind that there are some uncovered disasters for which you will not be paid, so negotiate the policy terms with your insurer.

Personal liability

The policy will serve you well in case someone sues you for damaging their belongings or injuring them. At the same time, financial assistance is offered to every member of your household, even for pets. So if your dog or cat bites a neighbor or someone on the street, you will still get liability coverage. However, do not think that you will get paid for causing bodily harm or killing people – home insurance does not apply to criminal acts committed on purpose. The same goes for injuries caused by car accidents.

Medical payments

This type of coverage is intended for those who accidentally inflicted physical damage on another person but were not sued. In this case, the insurance company will cover the trip to the doctor and all medical bills of the victim. Just like personal liability, the policy applies to all household members and cannot be used in the event of car accidents or intentional criminal acts.

How to Insure your Home?

Shopping for HOI is quite simple. It's all about comparison and research to get the most favorable policy, depending on your needs and preferences. The following steps will make the process of home insurance smoother:

1. Determine your needs. Take your time to think things through to the smallest detail. How will you search for companies – online or offline? Do you value fast customer service or put a reputation first? Will you benefit from progressive home insurance? What coverage options do you need? By answering these questions, you will narrow down your options.
2. Request quotes from several insurers. An HOI quote is an approximate cost estimate for your policy. And shopping around with different insurance carriers will improve your chances of getting the best rates. But it is also important to consider the terms of their policies to make sure the coverage meets your needs.
3. Make adjustments (if necessary). After comparing quotes from several providers and speaking with different experts, you may want to change your coverage options, get a greater dwelling amount, or reconsider the insurance term. Choose a few companies that suit you most and ask them for a revised quote proceeding from your specifications.
4. Pay for home insurance. Once you have identified which company you are going to work with, all that remains is to make a payment. Insurance comes into force immediately. So choose a convenient banking method and pay for the selected policy.

How to get a Home Insurance Quote?

Admit it, getting an HOI is far from the usual thing you do every day. And since you buy a policy for at least a year, it is important to compare the home insurance quotes in advance to make sure you will get a profitable deal. And there is nothing complicated since the whole process is quite simple. To get started, let's figure out what information you need to have on hand:

Your personal details:

• Your first and last name, birth date, and civil status
• Your contact information (phone number, email)
• Your residential address
• Number of pets you have in your household
• Whether you use your property for business purposes
• Whether you want additional coverage for your belongings

Your insurance details:

• The name of the company where you last purchased home insurance
• The terms and limits of your coverage
• Number of claims you filed during the life of your policy
• Desired start date of your new coverage
• What coverage type do you need

Your house details:

• The construction year of your house
• Date of the last home renovations
• The age of home systems and roof
• The total square footage of your home
• Construction materials
• Number of rooms
• Number of home-attached and detached structures

And now, when you have prepared all the required information, you can proceed to the process of getting HOI quotes. These are the basic options on how you can do this:

• Search for insurers online. This is the fastest way to get in touch with several companies at once. Thus, you get access to various offers and can find mobile home insurance or ordinary coverage easily. If you are satisfied with your quote, you have an opportunity to arrange a purchase online. In case you have any questions left, you can always contact the agent by phone to clear things up.
• Turn to a captive agent. Captive agents represent a specific company and walk you through the process of getting insurance. Thus, they provide you with a quote and give tips on what policy will work best for you. Captive agents charge a fee – a percentage of the premium you pay when buying home insurance. But the main disadvantage is that you will get a quote from one company only.
• Contact independent agents or brokers. This option is good for those who do not want to limit themselves to quotes from one company. Independent brokers and agents work with various insurance carriers and can provide you with a wide range of policies available for you. Although they do offer you a high-quality service, independent agents earn from the commission and so may direct you toward the most expensive deals.

How Much Does Home Insurance Cost?

The average cost of home insurance in the US is about $1 700 per year as of 2022. But the value varies and can be lower or higher than the average depending on several factors, including the location of your house and its rebuild cost. According to Quadrant Information Services, the cheapest policies can be found in Delaware, Idaho, Utah, Vermont, and Hawaii, ranging from $300 to $700. The most expensive insurance is offered to South Dakota, Nebraska, and Kansas residents – over $2 000, and Oklahoma – over $3 000.

How to Calculate Homeowners Insurance?

Home insurance providers take several steps to estimate your rates, and we will guide you through these steps so you can calculate the approximate value of your policy by yourself. You may also provide the gathered information to your carrier when they are determining the cost of your property.

Calculate your house’s rebuild cost

This figure is used to identify the amount of your dwelling coverage, which is the limit your HOI provider will pay you to rebuild the damaged house. The sum depends on a number of factors:

• The age and square footage of your house
• The age of home systems
• Construction materials
• Type of foundation and roof
• Unique building features

Calculate your property value

Insurance providers never leave this factor unattended when evaluating the value of your policy. So you can do the same by defining the total cost of your possessions, including:

• Household items
• Clothes
• Appliances
• Furniture
• High-value items (jewelry, artwork, and the like)

Consider the amount of coverage you need

Each coverage type features a different amount the company can pay you if something happens to your home or belongings. And your insurance should cover at least minimal costs of your property:

• Dwelling: pays enough for home repairs
• Other structures: 10% of dwelling coverage
• Personal property: 50% - 70% of dwelling coverage
• Loss of use: 20% of dwelling coverage
• Personal liability: varies up to $500 000
• Medical payments: varies

Repayments of Home Insurance

The way you repay your HOI depends on whether you have a mortgage or not. The point is that when you apply for a mortgage, a lender requires you to establish an escrow account used to make monthly payments for both your loan and home insurance. If you have no escrow account, the repayment terms are more flexible and depend on your coverage carrier as well as your preferences. Thus, you can pay for the policy monthly, quarterly, semi-annually, or annually.

What to Look for in Home Owners Insurance?

Choosing the right home insurance may be rather difficult for first-timers, but we are here to make things easier. So this is what you should take into account when picking a policy for your household:

✔ What are your coverage options

✔ Whether there are any coverage add-ons

✔ What insurance value can you get

✔ How much will you pay for your policy in total

✔ What repayment options does the company offer

Final Thoughts

The house is not only the walls where we live. This is where our heart is. This seemingly simple construction means a lot to every person. And what we build over the years, investing all our efforts and soul, can be destroyed in an instant. Unfortunately, this is the reality for many people these days. But suppose your home was damaged by some kind of natural disaster or natural rascals who broke into your house and destroyed your property. In that case, home insurance will compensate for the financial damage and make it easier for you to overcome the situation. So it's always better to secure your possessions in advance, although we hope the trouble will bypass all of you.