Owning a home can be a nervy business, for most of us, it might just be our biggest purchase in our lives. The high price we paid for our house also made it possibly our biggest liability if it is not managed properly. We could go broke just by having our house blown down by a typhoon, or burn down for example. Insurers see our fear, and creates various types of homeowner’s insurance to suit our different needs. Here are a few usual types these insurers often offer:

#1 Comprehensive – This is probably the most complete and inclusive home insurance policy – hence the name comprehensive. This type of policy covers both the building, and its contents (furniture, appliances etc) from all risks, except those stated in the policy contract (act of war for example are not covered). Some other items are also not covered as well, such as those that you can buy separate insurance for (eg. cars), or those which insurance is not available (uninsurable peril).

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#2 Basic – Also known as named perils policy, this policy only covers a certain perils that are specifically stated in the policy. Insurers often allow the homeowners to decide which hazard are to be covered, and which ones are not to be (for example, you can ask the insurer to cover for earthquake, theft and storm damage but not fire). As a result, these types of policy are often cheaper that the comprehensive coverage. But of course, the homeowner will be exposed to more risk, as the coverage will not be as complete as the comprehensive policy.

#3 Broad – If you are not to keen to pay top dollars for a comprehensive coverage, and yet are not comfortable with the basic coverage, perhaps a broad coverage will be suitable. Broad coverage basically seeks a compromise between comprehensive and basic coverages, by providing comprehensive coverage on the big-ticket items such as the building, and yet only provides named perils coverage on the contents of the house. For example, your policy has comprehensive coverage on the building, and flood, earthquake and storm damage on the contents. If your house burns down, you will get compensation on the buliding (since its comprehensive coverage), but not on the contents (fire damage is not in the named perils). Broad policy are one of the most popular types of coverages amongst homeowners in North America.

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#4 Bare Bones/No Frills – These type of coverages are often offered to houses that do not meet the insurer’s standards. There might be major issues with the house such as structural decay, or piping and heating problems. It only covers named perils, and some liability. It is advised that homeowners improve their property to qualify for better coverages.

Now that you have some understanding on whay types of homeowner’s insurance are there, perhaps its time to find out how you could qualify yourself for the cheapest homeowner’s policy?

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