Home insurance in the USA
In today’s world nothing is safe. Every homeowner knows the fear that some day, everything he has worked for so hard, could be gone in a single moment. Homeowner’s are faced with a multitude of threats, a simple home appliance can catch on fire and destroy your house, natural disasters – like hurricanes, tornadoes, earthquakes or even something as simple as lightning – can turn your housing dream into a nightmare.
Luckily we do have life insurances or home insurances that can help us to spread the risk. A homeowner who wants to be on the safe side will always adopt some kind of home insurance. Home insurance is also known as hazard insurance or homeowners insurance (with the industry abbreviation of HOI) will cover damages to private homes.
Before the 1950s a homeowner had to separately acquire insurance against all possible dangers to his home, resulting in huge and intransparent insurance packages. Although certain standards were introduced during the 1950ies, it was not before 1971 until a standardized insurance package became available that was easier to comprehend.
Home insurance protection level
There are various ways and levels of protection that a homeowner can opt for the home insurance: one can simply insure against loss or damage to property and goods, or even go as far as to insure against earning losses resulting from damage to your home. Another important type of insurance is against possible liabilities for accidents that may occur at home. Also other persons dwelling in your home can be included in such insurances if they cannot get an insurance of their own.
You can further customize your insurance to cover risks that might normally not occur, depending on the location of your home and the climate as well as the dangers typical for the region it is located in. However certain catastrophes are not included in standard contracts, examples are: floods, war and nuclear disasters. Your insurance rate may vary: for example if your house is located next to a fire department you can except to pay a lower fee in case of a fire insurance. The same may apply for insurances against burglary and vandalism if you are located close to a police station.
In the United States insurance packages usually range from small standard insurances to more complex types which may cover every risk. Every insurance level may offer a different set of coverage and can even be customized to the needs and wants of the homeowner.
Responsibilities as homeowner
There are limits to what will be covered by your insurance though. In case of a fire insurance the homeowner is obligated to install smoke detectors in his house and – depending on the value of the property and type of insurance – acquire appropriate systems like fire extinguishers and sprinklers installations. The homeowner might also be charged an additional premium fee to enjoy full insurance coverage. Most homeowners have families; a great idea would be to take a life insurance in addition to save money and to get a full insurance package.
Also certain acts of negligence can result in an investigation by your insurance company and a termination of the contract.
Financing
Usually an insurance policy is a type of term contract. This means that the contract between the home owner and the insurance company lasts for a set term, as long as the regular premiums are paid in time. A homeowner may also opt for a so-called perpetual insurance – this is a type of insurance without a fixed term.
In the United States it is common to purchase a new home by the means of a mortgage loan. Insurance companies usually offer premiums which are affordable for the homeowner. This is also in interest of the banks offering the mortgage in case the property is destroyed by a disaster.
There are exceptions to this, in cases where the value of the land exceeds the value of the property. A good example would be Florida, where waterfront owners with a mortgage often have to waive the need for a home insurance because of the high risk resulting in very high premiums. The banks involved would still be on the safe side, because the high land value of waterfront parcels would still make up for the losses incurred during a hurricane or flood.