Homeowners Insurance is a very complex but important aspect of owning a home. Actual laws and policies differ from state to state, but I will give basic details, applicable to most policies. Specifics for your state and area can be determined from a licensed agent. If you are just renting a home, you would need renters insurance while there are also different mobile home insurance and vacation home insurance policies, basically similar in concept but with extra wording applicable to the those types of risk. Any standard homeowner insurance policy will cover damage to the structure and personal possessions, up to a limit specified in the policy, caused by the following perils: storms (wind, hail, rain and snow) and tornados, fire, and lightning.
PLEASE NOTE: Homeowners in high-risk states (Alabama, Florida, Louisiana, Mississippi, North Carolina, South Carolina, and Texas) need to buy special Windstorm Insurance for protection against tornado, hurricane, hail and flood damage. This coverage is not available on a standard homeowner insurance policy and is more expensive. Earthquake insurance in California is also a separate and more expensive ($800 – $1600 per year premium) policy.
Components of Homeowners Insurance
The liability portion (coverage E) protects the homeowner against accidents or events that occur on the covered property. With this protection the home owner is protected from lawsuits that result from these events. Note that this coverage does not cover transfer of disease nor does it cover issues that arise from the exchange of drugs and controlled substances.
The property portion of the contract protects the home owner against loss due to fires, theft, and minor weather damage. It is important to note that most times major weather damage is not included in standard contracts. Insureds who live in areas that are prone to natural disaster should be advised to purchase extra protection to cover those risks. Flood, earthquake, hurricane, and tornado damage are not necessarily covered in standard contracts, so make sure to take precautions based on where you reside.
Additionally liability insurance covering injury or damage to members of the public or the property caused by an accident on your property is also covered, up to specified limits, as well as loss of use, due to down time while repairs are being made.
You should make sure that the coverage limits in your policy contract are high enough to cover complete replacement as well as other expenses in case of a disaster. A licensed home insurance agent will be able to advise you fully.
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Insurance riders and exclusions
There can also be riders and exclusions attached to a policy. Insurance Riders give coverage for items that are not normally covered or they can raise the standard limits of coverage. Exclusions do just what they say which is excluding specified items or risks from coverage. Flood and earthquake damage is excluded from a standard policy, therefore you would need to purchase extra cover for these risks.
In addition, If you operate a business from home or work from home you will need additional cover forage work-related risks, such as people coming to see you on business. Expensive jewelry or other items of high worth will need to be specified in a rider against damage or loss, for an additional premium. Otherwise there is a limit of coverage on jewelry, antiques and electronic equipment. If standard limits of cover are inadequate to cover your belongings, then you will need to have them increased.
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