Why home insurance is a must for home owners?
Acquiring a home is a big investment for almost all people. Often mortgage companies have a clause making it mandatory for home owners to get a home insurance, without which they wouldn’t be eligible to receive the loan. This is also commonly referred to as a home owners insurance or a hazard insurance, which protects property or private homes. Therefore, it is much safer to avail of a home insurance which safeguards the home owner from unforeseen circumstances.
History
The history of home insurance can be traced back to the 1950’s in the United States and Great Britain. The Great Fire in London back in 1666 destroyed over 90% of the city’s homes and this sparked the need to have some kind of an insurance coverage for homes. This resulted in insurance laws which were passed in the late 1940’s and allowed home owner policies to be legal.
Before this period, there were different policies which individually covered each problem such as coverage for fire losses, theft or personal property. The various policies which were covered by different insurance companies made things extremely confusing for customers. In order to streamline this process, the home insurance policy was introduced by Benjamin Franklin at Charles Town, also known as Charleston in South Carolina in the United States.
Types
In case the home burns down, or gets damaged, the owner would not only have to pay for the repairs but they would also have to pay for the mortgage as well. There are three important types of home insurance (in Denmark it’s called Hvad dækker Indboforsikring) coverages available, one of which covers either liability insurance or property insurance and the second which covers both. The third type of insurance policy includes personal protection, items at home, personal possessions, the home itself and accidents with the home owner within the territory of the home.
The categories of property insurances can be further divided into coverage for the structure of the home, other structures, personal belongings and additional living expenses. The first includes repairs or the rebuilding of the home. Detached structures such as storage sheds, garages, fences, sidewalks and driveways, are included as well. In case items like clothing, sports equipment, money, electronics and furniture are stolen or destroyed, only 50 to 70 % of the loss would be covered by the home insurance policy.
The cost of the policy and the premium which the home owner needs to pay depends on the value of the property as well as the additional items which are included in the policy and the amount required to replace all the items which were stated. The premium would be dependent on the probability of the occurring damage. There are certain conditions under which the insurance policy cannot be framed, in case of termites or nuclear explosion. However, special insurance policy can be purchased, which can include flood insurance, for instance.
Benefits
The first benefit of having a home insurance is that the home owner’s investment is protected. Most polices of this nature are inexpensive and are available at low premiums unlike other policies. In addition, various calamities such as explosions, fire, cyclones and earthquakes are also included in this.
In short, the home insurance policy helps home owners to be prepared to face any unforeseen circumstances without worrying too much.
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