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{{Expert-portal|Finance|date=November 2008}}
'''Home insurance''', also commonly called '''hazard insurance''' or '''homeowners insurance''' (often abbreviated in the real estate industry as '''HOI'''), is the type of [[property insurance]] that covers private homes. It is an [[insurance]] policy that combines various personal insurance protections, which can include losses occurring to one's home, its contents, loss of its use (additional living expenses), or loss of other personal possessions of the homeowner, as well as [[liability]] insurance for accidents that may happen at the home. It requires that at least one of the named insured occupies the home. The dwelling policy (DP) is similar, but used for residences which don't qualify for various reasons, such as non-occupancy or age. It is a multiple line insurance, meaning that it includes both [[property insurance|property]] and [[casualty insurance|casualty]] coverage, with an indivisible premium, meaning that a single premium is paid for all risks.<ref>Nance CP. (2003). Modern Real Estate Practice in Texas [http://books.google.com/books?id=wIVGVwTGZBMC&printsec=frontcover#PRA1-PA39,M1 p. 39].</ref>

The cost of homeowners insurance often depends on what it would cost to replace the house and which additional riders—additional items to be insured—are attached to the policy. The insurance policy itself is a lengthy contract, and names what will and what will not be paid in the case of various events. Typically, claims due to [[earthquakes]], [[floods]], "[[Act of God|Acts of God]]", or war (whose definition typically includes a [[Nuclear exclusion clause|nuclear explosion]] from any source) are excluded. Special insurance can be purchased for these possibilities, including [[flood insurance]] and [[earthquake insurance]]. Insurance must be updated to the present and existing value at whatever inflation up or down, and an appraisal paid by the insurance company will be added on to the policy premium.  Fire insurance will require a special premium charge, plus the addition of smoke detectors and on site fire suppression systems to qualify.  

The home insurance policy is usually a term contract—a contract that is in effect for a fixed period of time. The payment the insured makes to the insurer is called the premium. The insured must pay the insurer the premium each term. Most insurers charge a lower premium if it appears less likely the home will be damaged or destroyed: for example, if the house is situated next to a [[fire apparatus|fire station]], if the house is equipped with fire sprinklers and fire alarms, or if the house was built with solid brick. [[Perpetual Insurance|Perpetual insurance]], which is a type of home insurance without a fixed term, can also be obtained in certain areas.

In the [[United States]], most home buyers borrow money in the form of a [[mortgage loan]], and the mortgage lender always requires that the buyer purchase homeowners insurance as a condition of the loan, in order to protect the bank if the home were to be destroyed. Anyone with an insurable interest in the property should be listed on the policy. In some cases the mortgagee will waive the need for the mortgagor to carry homeowner's insurance if the value of the land exceeds the amount of the mortgage balance. In a case like this even the total destruction of any buildings would not affect the ability of the lender to be able to foreclose and recover the full amount of the loan.

The insurance crisis in Florida has meant that some waterfront property owners in that state have had to make that decision due to the high cost of premiums. See [[Citizens insurance]].
  
== Types of Homeowners Insurance ==
===United States===
As described in Wiening et al.<ref>{{note label|PI|2002: 5.3–5.4|none}}{{cite book
 | last = Wiening
 | first = Eric
 | authorlink = 
 | coauthors = George Rejda, Constance Luthardt, Cheryl Ferguson
 | editor = 
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 | title = '''Personal Insurance'''
 | origdate = 
 | origyear = 
 | origmonth = 
 | url = 
 | format = 
 | accessdate = 
 | accessyear = 
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 | edition = 1st edition
 | date = 
 | year = 2002
 | month = 
 | publisher = American Institute for Chartered Property Casualty Underwriters/Insurance Institute of America
 | location = [[Malvern, Pennsylvania]]
 | language = 
 | isbn = 0-89463-108-X
 | pages = 
 | chapter = 
 | chapterurl = 
}}
</ref>, prior to the 1950s, there were separate policies for the various perils that could affect a home. A homeowner would have had to purchase separate policies covering fire losses, theft, personal property, and the like. During the 1950s, policy forms were developed, allowing the homeowner to purchase all the insurance they needed on one complete policy. However, these policies varied by insurance company, and were difficult to comprehend.
The need for standardization grew so great that a private company based in [[Jersey City]], [[New Jersey]], [[Insurance Services Office]], also known as the [http://www.iso.com/ ISO], was formed in 1971 to provide risk information and issued a simplified homeowners policy for resell to insurance companies. These policies have been amended over the years until currently, the ISO has seven standardized homeowners insurance forms in general and consistent use . Of these HO-3 is the most common policy followed by HO-4 and HO-6. Others that are less used, though still significant, are HO-1, HO-2, HO-5, and HO-8. Each is summarized below:

;HO-1:A limited policy that offers varying degrees of coverage but only for items specifically outlined in the policy. These might be used to cover a valuable object found in the home, such as a painting.
;HO-2:Similar to HO-1; HO-2 is a limited policy in that it covers specific portions of a house against damage. The coverage is usually a "named perils" policy, which lists the events that would be covered.  As above, these factors must be spelled out in the policy. 
;HO-3:This policy is the most commonly written policy for a homeowner and is designed to cover all aspects of the home, structure and its contents as well as any liability that may arise from daily use, as well as any visitors who may encounter accident or injury on the premises. Covered aspects as well as limits of liability must be clearly spelled out in the policy to insure proper coverage. The coverage is usually called "all risk". Also called an "open perils" policy.
;HO-4:This is commonly referred to as renters insurance or renter's coverage. Similar to HO-6, this policy covers those aspects of the apartment and its contents not specifically covered in the [[blanket policy]] written for the complex. This policy can also cover liabilities arising from accidents and intentional injuries for guests as well as passers-by up to 150' of the domicile.  Common coverage areas are events such as lightning, riot, aircraft, explosion, vandalism, smoke, theft, windstorm or hail, falling objects, volcanic eruption, snow, sleet, and weight of ice. 
;HO-5:This policy, similar to HO-3, covers a home (not a condo or apartment), the homeowner and its possessions as well as any liability that might arise from visitors or passers-by. This coverage is differentiated in that it covers a wider breadth and depth of incidents and losses than an HO-3.
;HO-6:As a form of supplemental homeowner's insurance, '''HO-6''', also known as a Condominium Coverage, is designed especially for the owners of condos. It includes coverage for the part of the building owned by the insured and for the property housed therein of the insured. Designed to span the gap between what the homeowner's association might cover in a blanket policy written for an entire neighborhood and those items of importance to the insured, typically the HO-6 covers liability for residents and guests of the insured in addition to personal property. The liability coverage, depending on the underwriter, premium paid, and other factors of the policy, can cover incidents up to 150' from the insured property, all valuables within the home from theft, fire or water damage or other forms of loss. It is important to read the Associations By-laws to determine the total amount of insurance needed on your dwelling.
;HO-8: It is usually called "older home" insurance. It lets house owners with higher replacement cost than the market value insure them at the lower market value rate.

In addition, a '''Dwelling Fire''' policy is generally available for non-commercial owners of rented houses, which covers property damage to the structure, and sometimes to the owner's personal property (such as appliances and furnishings).  The owner's liability is generally extended from their own primary home insurance, and does not comprise part of the Dwelling Fire policy.  It is a counterpart to the HO-4 '''renter's''' policy.

==== Coverages ====

For each policy, there are typically six classifications of coverage. These are based on standard [[Insurance Services Office]] or [[American Association of Insurance Services]] forms.

===== Section I - Property Coverages =====

;Coverage A - Dwelling: Covers the value of the dwelling itself (not including the land). Typically, a [[coinsurance]] clause states that as long as the dwelling is insured to 80% of actual value, it will be replaced. This is in place to give a buffer against inflation. HO-4 (renter's insurance) typically has no Coverage A, although it has additional coverages for improvements.

;Coverage B - Other Structures: Covers other structure around the property which are not used for business, except as a private garage. Typically limited at 10% of the Coverage A.

;Coverage C - Personal Property: Covers personal property, with limits for the theft and loss of particular classes of items (eg, $200 for money, banknotes, bullion, coins, medals, ect).

;Coverage D - Loss of Use: Covers expenses associated with additional living expense (ie rental expenses) and fair rental value, if part of the residence was rented.

;Additional Coverages: Covers a variety of expenses such as debris removal, reasonable repairs, damage to trees and shrubs for certain named perils (excluding the most common causes of damage, wind and ice), fire department changes, removal of property, credit card / identity theft charges, loss assessment, collapse, landlord's furnishing, and some building additions. These vary depending upon the form.

;Exclusions: In an open perils policy, specific exclusions will be stated in this section. These generally include earth movement, water damage, power failure, neglect, war, nuclear hazard, intentional loss, and concurrent causation (for HO-3).<ref>The Academy of Producer Insurance Studies. (2000). ''The Insurance Essentials Handbook'', pp 77-91. The National Alliance for Insurance Education & Research.</ref>

==References==
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{{cite news |first=Joseph |last= 2. Connelly |authorlink= |coauthors= |title= Homeowner's Insurance & the Claims Process - Radio Interview March 3, 2008|url=http://www.lisamacci.com/thejusticehour/archives.html|work=WPBR - The Justice Hour with Lisa Macci |publisher= |date=  March 3, 2008|accessdate=2008-06-27 }}

[[Category:Types of insurance]]
[[Category:Public adjusters]]