There are a number of different types of home insurance - the type you choose will depend on where you live. Each policy will typically cover the contents, structure, and liability for the home and its owners. Specific policies might cover more things than others, so it's important to understand your individual policy.
Insurance for the house
There are currently 3 different types of house insurance available - HO-1 (basic), HO-2 (broad), and HO-3 (special). Both broad and basic coverage will only cover what is named - therefore, they are often referred to as peril coverage. Basic coverage applies to eleven types of losses: hail or windstorm, impact, riot, fire, sprinkler leakage, volcanic eruption, vandalism, sinkhole, smoke, lightening, and explosion. Broad coverage includes these eleven plus falling objects, weight of snow/ice/or sleet, and accidental water damage. Special coverage means the opposite of peril - everything is covered, unless it is excluded in the policy. The type of home insurance coverage you need is a personal decision and it is best to consult with an insurance expert.
Insurance for the condominium
Condominium insurance policies cover your condo for the things that are not covered by the association's master policy. Each association policy is different, so it is necessary to go over it before purchasing condo insurance. These policies are typically very flexible and allow you to choose how much and what coverage you require. Your association might determine what you are required to buy, but the specifics vary from condo to condo.
Insurance for rented properties
Finally, there is rental insurance. This insurance is necessary if you own a home but are renting it to others. Tenants bring additional liability, making a traditional home insurance policy inappropriate. Since you are receiving income, a rental home will require a business policy. Rental insurance policies provide you with additional coverage such as the loss of rent, and also remove much of the personal property coverage - tenants should purchase their own insurance for their personal property.
Replacement cost against actual cash value
One last thing to be aware of when shopping for home insurance is if the insurance covers the replacement value or actual cash value of your home. Replacement means your house is insured for the cost to replace the items with new items. Actual cash value covers the depreciated value of your home and its contents. Actual cash is cheaper, but it means less coverage. What you choose is up to you and the value of your home and property.
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