Homeowners Insurance

Owning a private home in a residential community subjects you to pay the Homeowners Insurance (HOI). For some homeowners, they see it as an added expense on top of the recurring mortgage they have to pay in the next 10 to 20 years. It can be devastating as some communities require all homeowners to pay the HOI. But despite the extra expense, this type of insurance is proven to be beneficial.  Let me explain.

What is Homeowners Insurance?

Homeowners Insurance is a type of insurance that is used to protect the homeowner’s property from various damages. There are also cases that homeowners’ insurance policies offer liability coverage against damages or injuries on the property. Generally, there are different forms of standardized homeowners insurance that can be chosen which will also depend on the needs of the homeowner. The following are types of HOI standardized by the Insurance Service Office

HO1 – Basic Form Homeowner Policy

HO2 – Broad Form Homeowner Policy

HO3 – Special Form Homeowner Policy

HO4 – Renter’s Insurance

HO5 – Premier Homeowner Policy

HO6 – Condominium Policy

HO8 – Older Houses

Read the complete description of each policy here.

Who needs it?

Whether you own or rent a home, condo, or apartment, you will need to have homeowners insurance. Indeed, you are not legally required to have homeowners insurance; however, it is one of the requirements when applying for a mortgage. It satisfies lenders. Almost all lenders are requiring borrowers to secure satisfactory insurance before they consider borrowers from qualifying for a loan.

In an insurance, there are policies that a home owner can choose from aside from the basic ones. The basic policies usually cover damages or accidents caused by fire, hurricane, vandalism, or lighting. Some other policies might cover damages due to theft too. To determine the policies that are applicable to you, an insurance agent or specialist can do the inspection beforehand.

The cost of the insurance will usually depend on:

  1. Building costs
  2. Crime rate in the neighbourhood
  3. Heating, electrical system,  and plumbing condition
  4. Materials and style layouts used for the home construction
  5. The probability rate of accidents or damages from hurricanes, flood,  and hail storms

One common issue of homeowners is the disaster brought about by flooding. Standard policies for most insurance do not cover damages caused by flood. You have the option to add it from the standard policy. You can get it directly from your insurance agent.

In times of disaster or accidents, an uninsured homeowner may end up losing his or her home. You cannot just risk your largest asset because of the high premium costs of insurances. One common and easiest way to lower your premium costs is by increasing the amount of money you have to spend to cover the damage/loss before the insurance company starts the responsibility to pay the claim which is also known as deductible.

Insurance is not an option for homeowners, rather a necessity. At first, an insurance maybe an intangible product but it is actually one of the best things that you can have


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