Insuring a Home
When you buy a home, if you have a mortgage, you may be required by the lender to purchase a homeowner's policy. Here's what to expect as you look for the appropriate policy to cover your home.
Because mortgage lenders are primarily concerned with protecting their interest in your home, the level of coverage they require might differ from the level that you consider adequate. You may decide to purchase additional protection depending on other factors, including the different ways insurance companies package these policies.
HO-1 is a basic homeowner's policy. It protects the structure and your personal property against some common hazards such as fire and lightning, wind and hail, smoke, theft, and damage by glass or safety glazing material that is part of a building. This policy also protects against some pretty exciting stuff, such as volcanic eruptions, explosion, riot or civil commotion, aircraft, vehicles, vandalism or malicious mischief.
HO-2 is an expanded version of HO-1. In addition to the above 11 perils, it covers against six more: weight of ice, snow or sleet, three types of water-related damage from home utilities or appliances, falling objects, and electrical surge damage.
HO-3 goes further by covering the above 17 perils and any other perils not specifically excluded by name, such as earthquakes, floods, wars, and nuclear accidents.
In general, these policies won't cover
The company may consider your credit rating, whether you have a criminal record, your previous addresses, and if you have history of insurance claims. Some insurers may want to know what kind of work you do, what your employment history is like, your marital status, and your age.
An insurer will also want to know certain information about the construction of the home. Is it brick or wood? How many square feet is it? Are there any unattached structures on the parcel? How far is the house from a fire station? How old is it? Is it perched on a cliff above the ocean?
Deadbolt locks, smoke detectors, and other preventative measures can lower your rates. But certain kinds of pets, a pool and other potential opportunities for personal injury can raise your rates. So can running a home business.
Once the insurer has taken this kind of information into account, it will be reflected in your rate quote, and it's your choice whether to accept, renegotiate, or look elsewhere for coverage.
The information in this newsletter is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Broadridge Advisor Solutions. © 2019 Broadridge Investor Communication Solutions, Inc.