There are a variety of forms available for insurance companies to use when creating a homeowners insurance policy. They have the option of utilizing forms created by another company. The ISO (International Organization of Standardization) and AAIS (American Association of Insurance Services) are two of the companies out there that create these forms. If an insurance company can afford the expense, they also have the option of creating their own policy forms. As such, I will try to hit all of the major elements in a home insurance policy, but coverage may vary by company, state or country.
Home insurance policies usually come in three different packages, sometimes known as Basic, Broad and Special Form. This is usually designated on your insurance policy by a number. For instance, a HO-2 policy would be a Broad Form homeowner insurance policy. The first two forms, Basic and Broad, are known as stated peril policies. Stated peril means that only events that are listed as covered perils would be insured under those forms. A Basic form policy would normally (but not always) list the following covered perils:
`Riot or Civil Commotion
`Vandalism and Malicious Mischief
In some areas, perils such as wind may be excluded. This happens in areas prone to events like tornadoes. If you live in an area like this, you would likely have to purchase a separate wind insurance policy.
A Broad form policy expands this list of covered perils. Along with the perils listed above, it could also include the following items:
`Weight of Ice, Snow or Sleet
`Collapse of Building
`Sudden and Accidental Tearing Apart, Burning or Bulging
`Accidental Discharge of Liquids or Steam
`Sudden and Accidental Damage from Electrical Currents
By looking over the list of covered perils, you will see that there is no entry for flood or earthquake. Flood insurance is regulated by the Federal government and information on it can be found here. Storm surges caused by hurricanes fall under this program. Many homeowners are caught unaware of this fact, believing that their home insurance covers the flooding caused by storm surges. Earthquake coverage can normally be added to your home insurance by endorsement. It is not automatically included with most insurance plans.
The final form of a home insurance policy is the Special Form. This works differently from the pervious two forms. Where those policies covered only the perils listed, a Special Form policy covers everything but that which is excluded. Commonly excluded perils are:
`War or Terrorism
`Ordinance or Law
`Wear and Tear
Other exclusions are also commonly included but would vary depending on where you live and the insuring company. It is impossible to have a comprehensive list here.
Remember that a home insurance policy is a contract between you and the insuring company. Where the company has the duty to pay a claim covered by the policy, you have duties under the policy also.
Maintenance of the home is one of the issues that can cause problems in the claim process. You are expected to maintain your home in good condition. Replacing leaky pipes, cracked windows and missing shingles fall under this. An insurance company would not pay to replace old, worn out plumbing if the pipes start to leak, but may pay for the resulting water damage if they did. Sometimes you don’t know there is a problem until a piece of the ceiling falls or the floor bulges.
If you have specific coverage questions on your own home insurance, read the paperwork that came with the declaration page. If you cannot find it, request a current copy from your company. After reviewing it, consult your agent with any questions you may have.