Homeowners insurance evolved in the late 1950s, when the insurance industry needed a single comprehensive policy to cover not only the house but also the contents and liability. The result is a standard policy that has two parts: property coverage and personal liability.
General Coverage
The most common policy, Homeowners 3 (HO-3), covers the house and other structures for everything except earthquakes, floods, and other exclusions (the fine print), depending on the policy and insurer. The HO-3 is the policy that most insurers require you carry on your house as a loan condition. Typically, HO-3 policies cover loss from fire, lightning, windstorms, hurricane wind damage but not from rain or flooding, tornadoes, hail, explosions, vehicles, smoke, theft vandalism, falling objects, and damage from ice, snow, or sleet and freezing pipes.
It does not cover flood or water damage from outside sources, earthquakes, neglect, intentional loss, earth movements, power failure, and damage caused by war. Personal liability is also covered if you or your property injures someone.
There is one exclusion that trips up many homeowners who suffer a loss and have older homes. If the building code has changed, increasing the subsequent repair or replacement costs, the homeowner pays the difference.
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Written by Lawrence
Topics: House