Homeowners Insurance

Homeowner’s insurance, sometimes referred to as home insurance or hazard insurance, is insurance that covers private homes.  The real estate industry often refers to this insurance by the abbreviation of HOI.  This insurance generally refers to insurance that covers two specific types of claims.  One is property, which provides coverage of the property and its contents.  The other is liability, which is coverage that protects the insured against accidents that happen in the home, and also accidents at the hands of the homeowner within the territory covered by the policy.  It is required that at least one of the persons named as insured actually occupies the home.  This form of policy is called “multi-line insurance.”  This means that both property and liability is covered by the same policy with one premium paying for all risks.

Property Coverage:

The property coverage in your homeowner’s insurance policy should cover the cost of rebuilding your home should it be totally destroyed.  If you are insufficiently covered your insurance company may only pay a portion of your total costs to repair or replace what you have lost.  There are three ways to insure your property.  One type of coverage is called “replacement cost.”  This is insurance that pays for the replacing of damaged property with no deduction for depreciation, but the compensation is limited to a maximum dollar benefit.  Another is called “guaranteed replacement cost,” which is similar to replacement cost, but has no benefit limit.  This is not available in all states, and is becoming rare.  California and some states offer a kind of coverage called “extended replacement cost,” which raises the payment benefit depending on circumstances and rising building and material costs.  However this form of coverage is practically extinct, and when you can find this kind of homeowner’s insurance they often limit the benefits from 100 percent to 150 percent depending on the provider and the geographical area.  A third type of coverage is called “actual cash value,” which pays the cash value of the dwelling minus depreciation costs.  Unless a policy specifies coverage that includes the statement “replacement value,” the coverage is only for actual cash value.  Factors that may affect costs include local construction costs, the square footage of the structure, the type of wall construction, the style of house, the number of rooms, and the type of roof.

Liability Coverage:

Liability coverage is insurance that insures against injury to people coming onto or about the owner’s property.  Homeowners are responsible to maintain safe conditions within their domain, and may be held liable for any injuries that occur on their properties or in their homes.  There are many examples of situations in which property owners are liable for injury to others.  A maintenance service person, such as repair man who comes onto your property to fix your air conditioning is considered an invitee, since it is assumed that, by nature, the repairman must enter your domain to facilitate repairs.  A licensee is someone with no contractual relationship with the owner, such as a social guest.  Believe it or not, even a trespasser may have rights to sue you for injury when not invited into your domain in any way.  Liability coverage does not cover intentional acts.  Negligent or accidental acts are generally covered.

Renter’s Insurance:

A third common type of homeowner’s insurance is renters’ insurance, which is coverage that insures against theft or damage of a renter’s property within a dwelling when the damage or personal injury is caused by similar events as outlined in a standard homeowner’s insurance policy.  This is an inexpensive policy that will compensate the insured in three primary categories.  One is liability coverage for visitors.  Another is personal possessions.  Also, if damage to a rental causes the renter to incur living additional living expenses while the rental is being repaired, those costs may be covered.

As in all insurance concepts, a homeowner’s insurance policy is purchased to protect the owner’s assets and savings against potential liabilities and obligations that are a result of damage to the property or injury resulting from accidents.  Whether you are a homeowner or a renter it makes sense to have this kind of coverage to protect yourself in case of claims.  Chad Olsen of SoCal Platinum Insurance is an insurance broker who has access to multiple providers.  Ask him to help you find the lowest priced option with the best coverage for homeowner’s insurance.