You may have read somewhere about the different types of insurance that are available. You will certainly notice this when you view the quotes for your home insurance. Is it enough information for you to determine that you are getting the right home insurance policy for you? Have you considered reviewing your home insurance coverage? Do you even know what the standard coverage is that you should look at? Perhaps this article can share with you some useful information and insights about real estate and additional coverage.
In principle, the home and additional cover are standard for all types of policies. For property coverage, there are 4 types, namely: residence, other structures, personal property and loss of use or additional living expenses. So when you receive your contents insurance quotes, check carefully whether they are included.
The first cover you will find is Cover A – Home. This usually covers the value of the house itself excluding the land. Normally there is a co-insurance clause
associated with this cover. This clause states that any loss will be adjusted to the replacement value, which is of course defined up to the policy limits and this condition is bound as long as the home is insured to 80% of its true value. The reason for this is to have a buffer against any inflation. Except for the Tenant Form or HO4, all other forms have this coverage. Although there is additional coverage for home improvement costs that are rented out for those who have a HO4 policy.
The second cover is Cover B – Other Structures. This covers the structure that surrounds or is within your property, but it must be for residential purposes or it would not be covered if used for business. This coverage usually has a limit of 10% to 20% of the insured home’s value, but you can use notes so you can have additional amounts.
The third cover is Cover C – Personal Property. This includes any personal property or contents of your home. However, losses of specific types of items have limits on theft. If you have a collection of coins, medals or precious metals, this is not covered by cover C. Other items include banknotes or cash, for example. This cover comprises 50% to 70% of Cover A. Some policyholders choose to insure higher cover so that they can also increase the cover for their personal property.
The fourth coverage is Coverage D – Loss of use or additional living expenses. This coverage covers additional costs incurred if the owner has to rent a space while the damaged property is being replaced or repaired.
In addition to property coverage, there is additional coverage that should not be confused with additional living expenses. The additional coverage is for costs associated with repairs that are not covered under property coverage. This may include tree and shrub damage (for limited and specifically named hazards), debris removal, credit card theft charges, damage assessment, and more.
While there is coverage, you may also want to know which ones are excluded, especially the ones listed in the policy. For HO3 or the special form that has an open hazard policy, there is a listed specific exclusion that most likely includes water damage, neglect, war, landslide or earthquake, intentional loss, simultaneous causation, and nuclear hazard. These exclusions are stated to protect the insurance company, otherwise policyholders may be negligent or willfully damage the insured home in exchange for money. For the other perils that are the wrath of nature, these are circumstances that are unavoidable and so insurance companies exclude these types of perils.