Living in a rented house may be difficult because of all the hectic work shifting requires, as well as the huge amount you pay annually. However, owning your house is no an easy job either. Not only are you supposed to maintain it on a day to day basis, you are also responsible for certain unforeseen calamities that might befall it some random day.

Gone are the days when friends and family used to help one recover from heavy losses and insurance is our savior in times of need. But there are a lot of questions that arise when it comes to choosing a house insurance package for your property. In order to answer them as effectively as possible and taking the right decision, you must know a few things mentioned below.

What are the basic forms of insurance policies?

1. House Insurance Policy – Basic Form

This policy contains protection for your home against 11 different listed causes of damage including lightning, vandalism, theft, windstorm, volcanic eruption, civil commotion, robbery and smoke.

2. House Insurance Policy – Broad Form

A broader form of the earlier insurance policy protects your home against seventeen causes of damage including the eleven from the earlier form of home insurance and six other ones.

3. House Insurance Policy – Special Form

If you live in a single-family home (also known as single family detached home), this type of insurance is for you. This insurance policy provides your home an ‘all risk’ coverage excluding protection from a few listed perils.

4. Renter’s Insurance

The Renters’ Insurance policy covers your personal items placed within a rented house against causes of damage listed in the Broad Form Home Insurance Policy or in Special Form Home Insurance Policy.

5. Premier House Insurance Policy

This policy covers the maximum number of causes of damage to regular houses and apartment just like the Special Form Home Insurance Policy does for single-family homes.

6. Condominium Policy

This policy is applicable if you live in a condominium.

7. Older Houses

If you own a house that has aged considerably and its market value is well below the costs that would occur should a calamity befall it, you’ll have to opt for the Modified Coverage Home Insurance Policy for its protection.

Why do different types of insurance policies exist?

Home insurance policies aim at protecting the structure as well as the contents that lie within a house. Now, different houses have different structures. For example, an apartment shares its walls, ceiling and floor with other apartment whereas a stand alone house is physically isolated, making the two houses poles apart in the nature of their structure. This difference in structure makes a house more vulnerable to some causes of damage, while being less susceptible to others. Its exposure to different perils determines the policy that would protect it in the best way while costing the insurant as less as possible.

Which type of insurance policy should I opt for?

There are a few factors that have to be considered when opting for a specific home insurance policy. Firstly, you would keep the type of house you own or have rented in consideration. Secondly, you’d make a list of perils that your house is more vulnerable to than other dangers. Thirdly, you will determine how much on a monthly basis you can pay your insurers. Based on these three factors, you make your choice. Here are the seven different types of policies set by ISO standards that you can choose from depending upon your needs.

Why should I know about the different categories into which my property insurance is classified?

As an insurant, it is necessary that you consider the cost of insurance as an investment. It is a protective investment against the unforeseen. However, we can roughly predict the probability of the occurrence of different calamities or accidents. For example, a fire is less like to occur than an incident of credit card theft. Hence, judging from the probability, you must invest more money in securing items that are more likely to be damaged. You can only do so by knowing the five basic categories that your house and personal items are classified into.

What do I do once I know what the classes of items are?

Once you know what the different classes are into which your house and items have been categorized, you can increase the money spent on a particular category. Such a decision will depend on the value of items you possess that fall under a certain category.