Property Insurance: How does Homeowners Policy Work? When buying a home, you are required to insure it. This is the only way to get financial assistance when you want to modify it. An understanding of how a homeowners policy is a must if you wish to get the most from the protection being offered. Property insurance: Types of homeowners policies Homeowners policies are classified based on the type of protection they offer. They fall into three major categories; HO-1, HO-2 and HO-3. If affordability is what you want when insuring a home, you can go either for HO-1 or for HO-2. But, the trouble is that both these types protect just the property. For this reason, HO-3 is generally preferred. It offers coverage both for your home and the contents in it. The policy is divided into two; the coverage offering protection to one’s property and coverage for liabilities. If you go for just property protection coverage, you get protection in four areas: The building where you stay and all the structures connected to it The buildings or land you own Protection for your valuables like jewelry The expenses involved in alternate facilities if your home gets damaged for any reason. Some also cover the cost of repairing damaged roof or burst pipes. But, you have to prove that it happened not because of your negligence. You should also understand that your homeowners policy does not
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