HOW DOES HOMEOWNERS INSURANCE WORKS

 HOMEOWNERS INSURANCE: DEFINITIONS, PERILS, COVERAGE AND BENEFITS

HOMEOWNERS INSURANCE (GUIDE FOR BEGINNERS)

Homeowners insurance policy is a kind of insurance policy that you can acquire to own a home without purchasing a home. This kind of property insurance covers losses and damages to an individual’s house and assets in the home. This insurance provides liability coverage against unforeseen actions like accidents in the home or on the property.

This is how homeowners insurance works;

A homeowner is required to provide proof of insurance in the property on request before the bank can issue him or her a mortgage. In other words when a mortgage is requested in a home. This policy usually covers four movements on the insured property and they include:

1.     interior damage

2.     exterior damage

3.     loss or damage of personal assets or belongings

4.     injuries that arise while in the property

For example if a claim is made to an insurance on interior decorations that is damaged, the cost to bring the property to its normal and usable condition is estimated by a claims adjuster to be 50,000, if the claim is approved. The homeowner is informed his/her deductible like 15, 000 according to the policy agreement entered into, the insurance company will issue a payment of the excess cost of 35, 000. The lower the monthly or annual premium the higher the deducted on an insurance policy.

Note that there is a difference between homeowners insurance policy and home warranty. Home warranty is that contract. That exist between a buyer and seller/manufacturer of appliances e.g. oven, refrigerator, generator etc. and when such property a replacement, repair or replacement such product as long as it falls within the warranty period that is usually stated. I think the minimum warranty I have seen in a period is usually 12 months (1 year) so if there is new for replacement within this period the manufacturer will fix it that is home warranty.

While homeowners does not cover damage that result from poor maintenance or inevitable wear and tear, home warranty covers such issues

In simpler and understanding way we can say:

Free image by Pixababay: Homeowners insurance

Homeowners insurance coverage is a part of property insurance that covers:

1.  Damage / Loss to home contents / properties as a result of fire

2.  Damage / Loss to home contents / properties as a result of theft/ burglary

3. Damage / Loss to home contents / properties as a result of flooding and allow perils

4.  Damage / Loss of personal possession such as laptop, mobile phone perils 

Covered perils:

Homeowners insurance offers coverage on named perils and open perils and
others.

Named perils:this is a policy that promote coverage for a loss specifically listed on the policy if is not listed than it’s not covered.

Open perilson the other hand means a policy that will provide coverage for all losses except those specifically exchanged on your policy.

Others are: 

Basic named perils:this provide protection against perils most likely to result in a total loss.If something happens to your home that is not the list then you are covered.

Broad name perils:This adds more covered perils that is to say where the basic named perils covers the broad named perils covers more.

All basic from perils:

• Burglary, 
• Break- no-damage, falling objects
• Accidental water damage and more

In the United States, most buyers borrow money in the form of a mortgage loan and condition of which the buyers required to purchase the homeowners insurance in order to protect the bank of the home is destroyed.  Any with an insurable interest in the property should be listed on the policy. In some case the mortgagee will vary the need for the mortgage to carry homeowners insurance if the value of the land exceeds the amount the mortgage balance.

In some cases even the total destruction of any building would not affect the ability of the lender to be able to foreclose and recover the full amount of the loan. In the United Kingdom (UK) it is required that the rebuild value (the actual cost of rebuilding a property to its current state should it be damage or destroyed) of a property that is to be protected as a condition of the mortgage. But the rebuild value is often lower than the market cost of the property because the market price frequently reflects the property as a going concern rather than just the price of the bricks and the mortar (Wikipedia-Rebuild cost)

Due to the increase in fraud and unpredictable weather this has affected home insurance premiums as they continue to risk in the united kingdom (UK) for this season there has been a shift on how home insurance is brought in the UK as customers become a lot more price sensitive, there has been a large increase in the amount of policies sold through price comparison sites 

Types of Property Insurance: 

Next >>>> Fire Insurance Here

You can reach me for an advice in better insurance policy.

THE IMPORTANCE OF TAKING UP A FIRE INSURANCE COVERAGE

 FIRE INSURANCE: (DEFINITIONS, COVERAGE AND PERILS)

FIRE INSURANCE (ALL ABOUT FIRE INSURANCE FOR DUMMIES)

A fire insurance is a contract under which the insurer in return for a consultant (Premium) agrees to indemnify the insured for the financial loss which the latter may suffer due to destruction of or damage to property or goods caused by fire during a specific period 

Take note: Under fire insurance, the damage/loss caused by fire should be accidental not intentional.

Anything damage caused by fire under fire insurance, it is covered by fire insurance in understanding terms, fire insurance is that kind insurance covering damages or losses caused by fire. This insurance has to do with or cover for cost of replacement repair or reconstruction of property above the limit set by the property insurance policy.

Some standard homeowners insurance policy includes coverage for fire. If excluded, fire insurance may need to be purchased separately especially if the property contains valuable items that cannot be covered with standard insurance coverage. The insurance company’s liability is limited by the policy value and not by the extent of damage or loss sustained by the property owner’s.

The purpose of fire insurance is to make good the financial loss suffered as a result of the fire. It isn't the duty of fire insurance to replace the economic loss that caused the fire waste. Some insurable properties are buildings, electrical installations, contents of building such as machines plant and equipment accessories. In more terms, fire insurance is a policy enacted to compensate the insurer for loss caused by fire that is: when the damage is caused, the insurer shifts the burden to the insurance policy.

What does fire insurance covers:

a. Destruction or damage by fire when fire goes outside its normal limits.

b. Fire caused by unlawful person who have no idea about the agreement of the insured.

c. Damage caused by fire brigade while fighting the fire.

d. Damage cause by falling walls or part of a building in which a fire takes place.

What does fire and special perils insurance cover:

1.  Fire– Fire, lightening, explosion (domestic)

2.  Natural perils– Storm, flood, earthquake, subsidence, landslide

3.  Social peril –Malicious damage, riot, strike, civil commotion.

4.  Chemical peril– Explosion, spontaneous, combustion, self-healing.

5. Miscellaneous– Escape of water, sprinkler leakage, impact damage – Vehicles, Animal and devices.

Fire insurance is a good idea if:

Free Images from Pixabay: fire insurance

1.   The value of your properly exceeds what your insurance company will cover for you.

2.   Fire is very common where you live and you need that little extra piece of mind.

The following policies are generally issued for fire insurance:

• Valued policy, 
• Specific policy, 
• Average policy, 
• Floating policy, 
• Comprehensive policy, 
• Consequential loss policy, 
• Replacement policy.

1.   Valued policy: This is the value of the subject matter’s agree upon at the time of taking up the policy, the insurer agrees to pay a pre-determined amount if the property in question is damaged or consumed by fire. The agreed cost may be higher or lesser than the value in the market as at the time of loss.

2.   Specific policy: This policy cover risk of a specific amount. In case of loss of property, the insurer will pay the loss if it is less than the specific amount. For example if the insurance policy is taken for $10,000 and the value of the property is $30,000 if the property worth $20,000 is lost, the insured will get the whole amount of loss. If the loss is up to $10,000 it will be paid in full.

3.   Average policy:   Average clause is added to penalize the insured for a lesser sum that the value of the property.

4.   Floating policy:   A floating policy is taken up to cover the risk of goods lying at different places but these goods should belong to a single person and only one policy will cover these goods. This policy is mostly effective to business men who engage in import and export of goods and these goods lie in different warehouse at different places.

5.  Comprehensive policy: This policy covers all types of risks including fire explosion, lightening, burglary, riots, labour, disturbance etc. this is referred to as  all-risk policy or comprehensive policy.

Consequential policy:   This is a type of policy that covers up loss of profits or consequential loss. The calculation of loss of profits is on the of loss of sales basis. You could take a separate policy for these standing charges.

7.  Replacement policy:     A replacement policy covers the compensation of a property loss or damaged along to the replacement price. The new asset must be just like the one which had been lost . The amount of compensation will depend the market price of the new asset so that it is replaced without additional cost additional cost be insured.

WHAT DO I NEED TO KNOW ABOUT PROPERTY INSURANCE

PROPERTY INSURANCE: DEFINITIONS, TYPES, AND BENEFITS

DEFINITIONS OF PROPERTY INSURANCE

It has been observed that so many people don’t understand the concept property insurance and as well casualty insurance and since they have no clue about such insurance policy/scheme they never apply for it thereby lacking behind on the best way to protect your family business, or property in the event that something might happen but we totally have our mind fixed that nothing can happen, though we ought not to think negative but “penny wise pounds foolish”       
Property insurance is a kind of insurance that protects a property insured from unforeseen actions or eventualities such as fire, theft or weather damage or even fight result. This property insurance can include automobile, aviation, marine and many more insurance that has to do with property.

This kind of insurance was first practiced in Great Britain. It has become so widely accepted that even the United States and African States practice this policy and it started with marine insurance. Property insurance involves physical things we can see which are also the natural thing or man made things and they involve our homes, buildings (commercial), motor vehicles, and personal possessions.


On the other hand, casualty insurance covers you for losses that happened to another individual definitely caused by you that is to say any damage you caused another individual and such unforeseen is covered by insurance then it is known as casualty insurance.

PROPERTY INSURANCE

There are various types of property insurance in detail will be discussed in this blog Getbeg Tutor Insurance  which are:

1)    Homeowners insurance

2)    Fire Insurance

3)    Flood or earthquake insurance

4)    Automobile insurance


This is how the casualty insurance works: If you caused damage on an individual or business organization it is called “third party coverage”. It states the damage caused by you in an individual then taken care of by the casualty insurance, if a person sues you for damage imposed on him/her knowing or unknowing your casualty insurance covers you.

Take note that both individuals and business entities can partake in the property insurance, you must stern the types of property/casualty insurance and choose the one that suits you best. It is also noted that:

Open perils cover all the cost of loss not specifically excluded in the policy and the common exclusion in an open peril phonemes include:


·        Earthquake

·        Floods

·        Nuclear incidents

·       Terrorism and war

Narrow perils require the actual cause of loss to be lifted in the poling for insurance to be provided. The common named peril include damage events such as

·        Fire

·        Lighting

·        Explosion and

·        Theft

Having known and understood what Property Insurance is, lets now discuss the different types of Property Insurance


NEXT PAGE >>>> (1). HOMEOWNERS INSURANCE: HERE