Home > Residential Insurance Overview Homeowner's insurance is designed to protect an insured person's home and property. Coverage may also be obtained for those people who reside in rental properties, titled renter's insurance. These types of insurance facilitate monetary compensation to the policy holder in the event that their home or property is damaged. Applicable types of damage often include flood, fire, hurricane, tornado, wind, hail, lightning, explosion, riot or civil disturbance, aircraft, vehicles, smoke, vandalism, theft, glass breakage, falling objects, plumbing, heating, A/C and appliance damage, freezing, volcanic eruption, war and nuclear accident. Usually, the cost of repair, rebuilding, or replacement of the damaged property is compensated for by the home insurance policy. In the case of renter's insurance, the cost of personal property contained within the rented housing is compensated for. Fortunately, homeowner's insurance premiums are known to be relatively stable and affordable in comparison to the volatile auto insurance premiums. The underlying factors which cause the difference in premium cost involve the relative degrees of risk. When owning a residence, there is far less risk for damage because the property is stationary and people tend to protect their residential property more than their vehicle property. There are significantly fewer accidents that involve homes than vehicles. To operate a vehicle over an extended period of time involves a relatively high risk of damage, as even a good driver is required to maneuver their vehicle through ever changing and often dangerous conditions. Generally speaking, there are 4 types of homeowner's insurance. HO1 is basic coverage HO2 is broad coverage HO3 is special coverage HO8 is older home protection Residential insurance can be divided into 2 segments: Property protection and Liability protection Property protection - This portion of a home insurance policy covers several property types including the policy holder's residence, other structures on the property, personal property, loss of use, and miscellaneous coverages. Insurance companies generally require policy holders to be covered for the majority of the value of their home, or around 80%. Note that, if an insured person is covered for 80% of the value of their home, then if they only sustain partial damage, then their policy will only compensate for 80% of the partial damage. Liability protection - This portion of a home insurance policy functions to compensate the insured if there is any legal monetary liability as a result of an occurence that is covered in the policy. This also pays for medical costs related to any injured persons. There are certain exclusions to liability coverage, including intentional acts of harm, damages caused by the insured's vehicles, bodily injury to the insured, noninsured locations, and communicable diseases. Umbrella policies, or excess liability policies, are supplemental to standard liability protection, and pay only after the other liability coverage has been exercised. Discount Factors Consumers can be granted discounts on their residential insurance for the following factors: Multiple policies - When a policy holder uses the same insurance company to cover their home, auto, and other interests. Safety devices - Including smoke detectors, burglar alarms and fire extinguishers. Nonsmoker's - Nonsmoker's are less likely to burn down their home. Fire resistant material - A house constructed with fire retardant materials may reduce premiums. Mature Homeowner - A reward for longevity. Loyal customer - Rewards long-time customers. Other Types of Homeowners Insurance Condominium Insurance - Condominiums can be purchased by individuals, and normally there are multiple condo units in a given housing development. Each individual who owns a condo usually pays a fee to a homeowner's association in order to fund the maintenance of the common areas. This insurance covers personal property and liability and also extends liability insurance to certain portions of the common areas. Renter's Insurance - This insurance is for people who live in rental housing. It does not cover the actual residential building, which belongs to someone else, but instead covers personal property within the residence, as well as legal liability within the unit. Mobile Home - Mobile home insurance extends residential damage and liability protection just as any other home insurance policy, but there are some unique situations that can be covered with endorsements to this type, including moving damages, costs of moving the home to avoid peril, and protection of a lienholder due to movability of the home. Mobile home owners often do not own the land upon which the unit is located, and more importantly, mobile homes are more vulnerable to damages than traditional homes. Other Residential Notes Earthquake insurance - This type of coverage is very expensive, as a result of the tremendous damage that can occur due to an earthquake. The protection is an add-on to basic homeowner's coverage, and is specifically excluded in all homeowner's insurance policies. Often insurance companies suspend the availability of earthquake coverage because of seismic activity which prompts many people to converge upon the insurance providers for coverage. Flood insurance - The National Flood Insurance Program is available to people who live in a community that is in danger of flooding and has agreed to join the NFIP program. The policies are brokered by private insurance companies. Crime insurance - The Federal Crime Insurance Program is available to people in order to protect them against burglary and robbery of their homes. The coverage is sold directly through the government. FAIR - Fair Access to Insurance Requirements - This program is intended to help provide high risk properties with access to insurance. Examples are properties that are located near an ocean, vulnerable to wind and tide, and properties that are in an inner city, more vulnerable to arson. This program may be the only way for high risk properties to obtain insurance, and sometimes they do not provide the extent of coverage that a regular homeowner's policy would. Personal articles floater - Specific articles in your home can be identified for coverage and their value determined due to purchase receipts. This protection is added as an endorsement.