Tuesday, November 18, 2014

Homeowners Insurance: How Does It Work?

An insurance pertains to an arrangement or contract by which the insurance agency or the government is bound to compensate financially for loss, damage, illness, or death. The person, group, or other party in place to receive this compensation must pay a premium to the insurance agency.

A homeowners insurance is a type of insurance for a residential property. The standard type homeowners insurance consists of two main sections: one, to compensate for damages to the property; and two, to compensate for damages to personal belongings within that property.

The first section sees to damages to the interior or exterior of the property. Typical causes of damage include vandalism, fire, hurricanes, lightning, and certain natural disasters, as specified in the policy.

The second section deals with damages to personal belongings within the property. From personal effects to your appliances, the insurance should typically cover all items within the home. Certain policies allow for an “off-premises” coverage, under which you can claim insurance for belongings damaged or lost outside of one’s home.

Additionally, a homeowners insurance provides a personal liability coverage against accidents and injuries (applicable to pets, as well) that occur within the property. 

Events like earthquakes, floods, and “acts of God” and war are often excluded from the standard homeowners insurance. As such, it is advised for residents of areas susceptible to earthquakes and flooding, in particular, to purchase amendments (called “endorsements”) in the insurance contract to protect against such events.

Most insurance companies provide 50-70% coverage, meaning that compensation amounts to 50-70% of the total cost of your insurance on your home.

Applying for a homeowners insurance involves a meticulous process. Research is necessary as to determine the best insurance agency and policy to work with. An evaluation and inventory of your property is also called for to determine its current value and cost.



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