Once you have bought the home of your dreams, you would go to any length to protect it against unseen calamities. Fire, tornadoes, burglaries and other accidents can significantly damage both your house and what lies within it. And when it comes to choosing the right sort of home insurance deal for your home, it is necessary that you are informed of all the options you have.
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 properties 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 can you 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.
1. Home Insurance Policy – Basic Form
This policy contains protection for your home against 11 different listed causes of damage. Your home as well the contents within it is insured. However, you will have to list down all the contents when applying for insurance. The causes of damage included in the Basic Form Home Insurance Policy are:
• Lighting
• Vandalism
• Theft
• Damage from vehicles and aircraft
• Windstorm/hail
• Civil commotion
• Volcanic eruption
• Personal liability
• Glass breakage
• Robbery
• Smoke
2. Home 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. The other six causes of damage are listed on the contract.
3. Home 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. Since your home does not share walls and/or boundaries with other homes in the area, it is more vulnerable to damage by causes such as tornadoes. This insurance policy provides your home an ‘all risk’ coverage. The term ‘all risk’ means that the policy insures you protection against all sorts of causes of damage expect those which are present in the list of ‘excluded causes’.
4. Renter’s Insurance
You can opt for home insurance even if you live in a rented house or apartment. 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. It also usually includes personal damages caused by a third party.
5. Premier Home 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. Meaning, that it will cover your home against all perils except for those specifically excluded.
6. Condominium Policy
The difference between an apartment and a condominium is legal and can’t be told by just looking at an apartment. Condominiums differ from apartments in the way their ownership is shared between the primary owner and the management of the flats. If you live in a condominium, you’ll have to opt for the Condominium Policy gain protection against perils.
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.