A home insurance, also known as homeowners insurance, is an
insurance policy that combines into one, the various personal
insurance protections that can include losses occurring to the real
estate property owned by an individual which is usually one's home,
its contents, loss of its use in terms of additional living
expenses, loss of other personal possessions of the homeowner, as
well as liability insurance for any accidents that may happen at the
property in question.
The cost of a home insurance usually depends on how much it would
cost to replace the house in the event of a mishap and which
additional riders or additional items need to be insured that are
attached to the policy. The insurance policy in itself is a lengthy
contract, and clearly describes what will and what will not be paid
in the case of various unfortunate events that may cause losses to
either the property itself of the contents within.
Generally, home insurance claims due to damages caused by
earthquakes, floods, or other 'Acts of God', or war whose definition
normally includes a nuclear explosion from any source, are excluded.
Special insurance can however be purchased for these possibilities,
including flood insurance and earthquake insurance, at an additional
The homeowners' insurance policy is typically a term contract
which is one that remains in effect only for a fixed period of time.
The payment that the person whose property is insured makes to the
insurer is called the insurance premium and this is to be paid every
term. Most insurers tend to charge a lower premium if it appears
less likely that the home will be damaged or destroyed; for
instance, if the house is in close proximity to a fire station, or
if the house in itself is equipped with fire sprinklers and fire
Another type of home insurance without a fixed term is also
available and is called Perpetual insurance, which can also be
obtained in only certain earmarked areas. In the United States of
America, most home buyers borrow money from financial institutions
of banks in the form of a mortgage, and the mortgage lender almost
always requires that the buyer purchase a home insurance as a
pre-condition before the loan can be disbursed, in a bid to protect
the lender's interest, in case the home were to be destroyed by some
unfortunate turn of events. Therefore, anyone with an insurable
interest in the property must be listed on the policy.