Changes
→In the United States: reduce section after move to Insurance in the United States
{{technical|date=May 2016}}
'''Home insurance''', also commonly called '''homeowner's insurance''' (often abbreviated in the US real estate industry as '''HOI'''), is a type of [[property insurance]] that covers a [[private residence]]. It is an [[insurance]] policy that combines various personal insurance protections, which can include losses occurring to one's home, its [[Contents insurance|contents]], loss of use (additional living expenses), or loss of other personal possessions of the homeowner, as well as [[legal liability|liability]] insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.
Additionally, homeowner's insurance provides financial protection against disasters. A standard home insurance policy insures the home itself along with the things kept inside.
== Overview ==
Homeowner's policy is a multiple-line insurance policy, meaning that it includes both [[property insurance]] and [[liability insurance|liability]] coverage, with an indivisible premium, meaning that a single premium is paid for all risks. This means that it covers both damage to one's property and liability for any injuries and property damage caused by the owner or members of his/her family to other people. It may also include damage caused by household pets. The U.S. uses standardized policy forms that divide coverage into several categories. Coverage limits are typically provided as a percentage of the primary Coverage A, which is coverage for the main dwelling.<ref>Nance CP. (2003). ''Modern Real Estate Practice in Texas'' [https://books.google.com/books?id=wIVGVwTGZBMC&printsec=frontcover#PRA1-PA39,M1 p. 39].</ref>
The cost of homeowner's insurance often depends on what it would cost to replace the house and which additional endorsements or riders are attached to the policy. The insurance policy is a legal contract between the insurance carrier ([[insurance company]]) and the named insured(s). It is a contract of indemnity and will put the insured back to the state he/she was in prior to the loss. Typically, claims due to [[floods]] or war (whose definition typically includes a [[nuclear exclusion clause|nuclear explosion]] from any source) are excluded from coverage, amongst other standard exclusions (like termites). Special insurance can be purchased for these possibilities, including [[flood insurance]]. Insurance is adjusted to reflect the cost of replacement, usually upon application of an inflation factor or a cost index.
=== Pricing ===
{{Further|Replacement value#Home insurance in the United States}}
Major factors in price estimation include location, coverage, and the amount of insurance, which is based on the estimated cost to rebuild the home ("replacement cost").<ref name="Covered" />
If insufficient coverage is purchased to rebuild the home, the claim's payout may be subject to a [[co-insurance]] penalty. In this scenario, the insured will be subject to an out of pocket fee as a penalty. Insurers use vendors to estimate the costs, including [[CoreLogic]] subsidiary Marshall Swift-Boeckh, Verisk PropertyProfile, and E2Value, but leave the responsibility ultimately up to the consumer. In 2013, a survey found that about 60% of homes are undervalued by an estimated 17 percent.<ref>{{Cite web|title = Insurers Continue to Improve Their Home Valuations, Says MSB|url = http://www.insurancejournal.com/news/national/2013/08/12/301440.htm|website = www.insurancejournal.com|access-date = 2016-01-17}}</ref> In some cases, estimates can be too low because of "demand surge" after a catastrophe.<ref name="Covered" /> As a safeguard against a wrong estimate, some insurers offer "extended replacement cost" add-ons ("endorsements") which provide extra coverage if the limit is reached.<ref name="Covered" />
Prices may be lower if the house is situated next to a [[fire apparatus|fire station]] or is equipped with fire sprinklers and fire alarms; if the house exhibits wind mitigation measures, such as [[hurricane shutters]]; or if the house has a [[security system]] and has insurer-approved [[Lock (security device)|lock]]s installed.
Typically payment is made annually. [[Perpetual insurance]] which continues indefinitely can also be obtained in certain areas.
===Covered perils===
Home insurance offers coverage on a "named perils" and "open perils" basis. A "named perils" policy is one that provides coverage for a loss specifically listed on the policy; if it's not listed, then it's not covered. An "open perils" policy is broader in the sense that it will provide coverage for all losses except those specifically excluded on your policy.
'''Basic "named perils"'''<ref>{{cite web |url=https://www.irmi.com/online/insurance-glossary/terms/b/basic-causes-of-loss-form-iso.aspx |title=Basic causes of loss form (ISO) – Insurance Glossary {{!}} IRMI.com |website=www.irmi.com |accessdate=2016-06-07}}</ref> – this is the least comprehensive of the three coverage options. It provides protection against perils most likely to result in a [[total loss]]. If something happens to your home that's not on the list below, you are not covered. This type of policy is most common in countries with developing insurance markets and as protection for [[occupancy|vacant]] or unoccupied buildings.
Basic-form covered perils:
* [[Fire]]
* [[Lightning]]
* [[Storm|Windstorm]] or [[hail]]
* [[Explosion]]
* [[Smoke]]
* [[Vandalism]]
* Aircraft or [[traffic collision|vehicle collision]]
* [[Riot]] or civil commotion
'''Broad "named perils"'''<ref>{{cite web |url=https://www.irmi.com/online/insurance-glossary/terms/b/broad-causes-of-loss-form-iso.aspx |title=Broad causes of loss form (ISO) – Insurance Glossary {{!}} IRMI.com |website=www.irmi.com |accessdate=2016-06-07}}</ref> – this form expands on the "basic form" by adding 6 more covered perils. Again, this is a "named perils" policy. The loss must specifically be listed to receive coverage. Fortunately, the "broad form" is designed to cover the most common forms of property damage.
Broad-form covered perils:
* All basic-form perils
* Burglary, break-in damage
* Falling objects (e.g. tree limbs)
* Weight of ice and snow
* Freezing of plumbing
* Accidental water damage
* Artificially generated electricity
'''Special "all risk"'''<ref>{{Cite web|url=https://www.irmi.com/online/insurance-glossary/terms/s/special-perils.aspx|title=Special perils – Insurance Glossary {{!}} IRMI.com |website=www.irmi.com |accessdate=2016-06-07}}</ref> – special-form coverage is the most inclusive of the three options. The difference with "special form" policies is that they provide coverage to all losses unless specifically excluded. Unlike the prior forms, all unlisted perils are covered perils. However, if something happens to your home, and the event is on the exclusions list, the policy will not provide coverage.
Special-form excluded perils:
* Ordinance of law
* [[Earthquake]]
* [[Flood]]
* [[Power outage|Power failure]]
* [[Neglect]]
* [[War]]
* Nuclear hazard
* Intentional acts
== In the United States ==
[[File:YscloskBrownroofBuckets.jpg|thumb|right|A home in [[Louisiana]] damaged by [[Hurricane Katrina]]]]
In the [[United States]], most home buyers borrow money in the form of a [[mortgage loan]], and the mortgage lender often requires that the buyer purchases homeowner's insurance as a condition of the loan, in order to protect the bank if the home is 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 such a case 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.
Home insurance in the United States may differ from other countries; for example, in Britain, [[subsidence]] and subsequent foundation failure is usually covered under an insurance policy.<ref>{{cite web |last=Murphy |first=Kate |date=2010-03-03 |url=https://www.nytimes.com/2010/03/04/garden/04foundation.html |title=Shifting Soil Threatens Homes' Foundations |publisher=The New York Times |accessdate=2014-01-02}}</ref> United States insurance companies used to offer foundation insurance, which was reduced to coverage for damage due to leaks, and finally eliminated altogether.<ref>{{cite web|first=Jeffery |last=Ellison |url=http://www.essortment.com/articles/home-insurance-coverage_248.htm |title=Are home foundation repairs covered by insurance? |publisher=Webcite archive |accessdate=2014-01-02 |deadurl=yes |archiveurl=https://www.webcitation.org/5o9kTQvOg?url=http://www.essortment.com/articles/home-insurance-coverage_248.htm |archivedate=March 11, 2010 |df= }}</ref> The insurance is often misunderstood by its purchasers; for example, many believe that mold is covered when it is not a standard coverage.<ref>[http://www.insurancejournal.com/news/national/2013/05/14/291804.htm Homeowners Confused About Insurance Coverage: Survey]. InsuranceJournal.com</ref>
=== History ===
The first homeowner's policy ''per se'' in the United States was introduced in September 1950, but similar policies had already existed in Great Britain and certain areas of the United States. In the late 1940s, US [[insurance law]] was reformed and during this process multiple line statutes were written, allowing homeowner's policies to become legal.<ref>{{cite web |first=Frederick J. |last=Hunt, Jr. |year=1962 |url=http://www.casact.org/pubs/proceed/proceed62/62012.pdf |title=Homeowners – The First Decade |journal=Proceedings of the Casualty Actuary Society |accessdate=2014-01-02}}</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.<ref>{{note label|PI|2002: 5.3–5.4|none}}{{cite book | last = Wiening | first = Eric |author2=George Rejda |author3=Constance Luthardt |author4=Cheryl Ferguson | title = Personal Insurance |edition = 1st |year = 2002 | publisher = American Institute for Chartered Property Casualty Underwriters/Insurance Institute of America | location = [[Malvern, Pennsylvania]] | isbn = 0-89463-108-X}}</ref>
The need for standardization grew so great that a private company based in [[Jersey City]], [[New Jersey]], [[Insurance Services Office]], also known as the ISO, was formed in 1971 to provide risk information and it issued simplified homeowner's policy forms for reselling to insurance companies. These policies have been amended over the years.{{citation needed|date=January 2014}}
Modern developments have changed the insurance coverage terms, availability, and pricing.<ref name=Covered>[http://money.cnn.com/2013/04/12/real_estate/homeowners-insurance.moneymag/index.html?iid=EL Covered by homeowners insurance? Don't be so sure]. CNN Money. [https://www.webcitation.org/6G6HVaiTp?url=http://uphelp.org/news/covered-homeowners-insurance-dont-be-so-sure/2013-04-15 WebCite archive].</ref> Homeowner's insurance has been relatively unprofitable, due in part to catastrophes such as hurricanes as well as regulators' reluctance to authorize price increases.<ref name=Covered/> Coverages have been reduced instead and companies have diverged from the former standardized model ISO forms.<ref name=Covered/> Water damage due to burst pipes in particular has been restricted or in some cases entirely eliminated.<ref name=Covered/> Other restrictions included time limits, complex replacement cost calculations (which may not reflect the true cost to replace), and reductions in wind damage coverage.<ref name=Covered/>
=== Coverage rates ===
According to a 2015 [[National Association of Insurance Commissioners]] (NAIC) report on data from 2012, 76.8% of homes were covered by owner-occupied homeowners' policies. Of these, 62.9% had the HO3 Special, and 9.4% had the more expensive HO5 Comprehensive. Both of these policies are "all risks" or "open perils", meaning that they cover all perils except those specifically excluded. 2.7% were the HO2 Broad, which covers only specific named perils. Others, at about 1% each, include the HO1 Basic and the HO8 Modified, which is the most limited in its coverage. HO8, also known as older home insurance, is likely to pay only actual cash value for damages rather than replacement.<ref name=":4">{{Cite web|url=http://www.naic.org/prod_serv/HMR-ZU-14.pdf|title=Dwelling Fire, Homeowners Owner-Occupied, Homeowners Tenant, Condominium/Cooperative, and Unit Owners Insurance: Data for 2012|website=NAIC.com|publisher=National Association of Insurance Commissioners|access-date=2016-06-14}}</ref>
The remaining 21.3% of home insurance policies were covered by renter's or condominium insurance. 14.8% of these had the HO-4 Contents Broad form, also known as renters' insurance, which covers the contents of an apartment not specifically covered in the [[blanket policy]] written for the complex.<ref name=":4" /> This policy can also cover liability arising from injury to guests as well as negligence of the renter within the coverage territory. 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. The remainder had the HO-6 Unit-Owners policy, also known as a condominium insurance, which is designed for the owners of condos and includes coverage for the part of the building owned by the insured and for the property housed therein. Designed to span the gap between the coverage provided by the blanket policy written for the entire neighborhood or building and the personal property inside the home. The condominium association's by-laws may determine the total amount of insurance necessary. E.g., in [[Florida]], the scope of coverage is prescribed by statute – 718.111(11)(f).<ref>{{cite web|url=http://www.flsenate.gov/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=Ch0718/Sec111.HTM|title=Flsenate Archive: Statutes & Constitution
> View Statutes|author=|date=|website=www.flsenate.gov}}</ref>
=== Causes of loss ===
According to the 2008 [[Insurance Information Institute]] factbook, for every $100 of premium, in 2005 on average $16 went to fire and lightning, $30 to wind and hail, $11 to water damage and freezing, $4 for other causes, and $2 for theft. An additional $3 went to liability and medical payments and $9 for claims settlement expenses, and the remaining $25 was allocated to insurer expenses.<ref>{{cite book |title=The I.I.I. Insurance Fact Book 2008 |url=https://books.google.com/books?id=BTUYjpQVPA0C&pg=PA85#v=onepage&q&f=false |page=85 |accessdate=2014-01-02}}</ref> One study of fires found that most were caused by heating incidents, although smoking was a risk factor for fatal fires.<ref>{{cite journal |vauthors=Runyan CW, Bangdiwala SI, Linzer MA, Sacks JJ, Butts J |title=Risk factors for fatal residential fires |journal=N. Engl. J. Med. |volume=327 |issue=12 |pages=859–63 |date=September 1992 |pmid=1508246 |doi=10.1056/NEJM199209173271207 |url=}}</ref>
=== Claims process ===
After a loss, the insured is expected to take steps to mitigate the loss. Insurance policies typically require that the insurer be notified within a reasonable time period. After that, a [[claims adjuster]] will investigate the claim and the insured may be required to provide various information.
Filing a claim may result in an increase in rates, or in nonrenewal or cancellation. In addition, insurers may share the claim data in an industry database (the two major ones are CLUE and A-PLUS<ref>[http://www.iso.com/Products/A-PLUS/A-PLUS-Property-Database-claims-info-for-underwriting.html A-PLUS Property Database] {{Webarchive|url=https://web.archive.org/web/20130516040227/http://www.iso.com/Products/A-PLUS/A-PLUS-Property-Database-claims-info-for-underwriting.html |date=2013-05-16 }}. ISO.</ref>), with Claim Loss Underwriting Exchange (CLUE) by [[Choicepoint]] receiving data from 98% of U.S. insurers.<ref>[http://www.bankrate.com/finance/insurance/claims-that-boost-your-insurance-rates-1.aspx Claims that boost your insurance rates]. Bankrate.com.</ref>
== In the United Kingdom ==
As in the US, mortgage lenders within the [[United Kingdom]] (UK) require the rebuild value (the actual cost of rebuilding a property to its current state should it be damaged or destroyed) of a property to be covered as a condition of the loan. However, the rebuild cost is often lower than the market value of the property, as the market value often reflects the property as a going concern, as opposed to just the value of the bricks and mortar.
A number of factors, such as an increase in fraud and increasingly unpredictable weather, have seen home insurance premiums continue to rise in the UK.<ref>http://www.theaa.com/services/insuranceandfinance/insuranceindex/</ref> For this reason, there has been a shift in how home insurance is bought in the UK—as customers become a lot more price-sensitive, there has been a large increase in the amount of policies sold through price comparison sites.
In addition to standard home insurance, some 8 million households in the UK are categorized as being a "non-standard" risk. These households require a specialist or non-standard insurer that would cover home insurance needs for people that have criminal convictions and/or where the property suffers subsidence or has previously been underpinned.
== Around the world ==
'''Premium volume by country (2013)'''
{| class="wikitable"
!World rank<ref name=":3">{{Cite web|url=https://www.abi.org.uk/Insurance-and-savings/Industry-data/Key-Facts-2014|title=UK Insurance Key Facts 2014 ABI|website=www.abi.org.uk|access-date=2016-06-14}}</ref>
!Country
!Region
!Premium volume (2013, USD Mil):<ref name=":3" />
|-
|1
|United States
|Americas
|1,259,255
|-
|2
|Japan
|Asia
|531,506
|-
|3
|United Kingdom
|Europe
|329,643
|-
|4
|China
|Asia
|277,965
|-
|5
|France
|Europe
|254,754
|-
|6
|Germany
|Europe
|247,162
|-
|7
|Italy
|Europe
|168,544
|-
|8
|South Korea
|Asia
|145,427
|-
|9
|Canada
|Americas
|125,344
|-
|10
|Netherlands
|Europe
|101,140
|}
'''Building and contents coverage'''
Countries such as [[China]], [[Australia]], and the [[United Kingdom]] use a more straightforward approach to home insurance, called "building and contents coverage" commonly referred to as "home and contents insurance". Relative to the insurance policies of the United States, building and contents coverage offers a very basic level of coverage. Most standard policies only cover the most basic perils listed below:
* Storm or flood
* Fire
* Lightning or explosion
* Falling trees or branches
* Subsidence, drag or landslip
* Breakage of glass or sanitary fittings
* Damage from escaped water or oil
* Shock caused to the house by animals, vehicles or aircraft
'''Building coverage'''
Building covers both the primary structure as well as detached structures such as garages, sheds, and back houses that are on property. However, different insurers may not cover things like boundary walls, fences, gates, paths, drives or swimming pools, so it is important to check the specific policy language.<ref name=":1">{{Cite web|url=https://www.abi.org.uk/Insurance-and-savings/Products/~/media/2BFFB3476ABF449984B137EF43F1B335.ashx|title=Guide to Home Buildings and Contents Insurance|date=|website=https://www.abi.org.uk|publisher=Association of British Insurers|access-date=}}</ref> This is an equivalent of both Coverage A and B in homeowners insurance policies in the United States.
'''Contents coverage'''
Contents insurance covers personal effects such as furniture, clothes, electronics, jewelry, etc. Most policies limit the individual amount of money paid out for each category of items.<ref>{{Cite web|url=https://www.moneysmart.gov.au/insurance/home-and-contents-insurance#contentspolicy |title=Home & contents insurance – ASIC's MoneySmart |author=Australian Securities & Investments Commission |date=2016-01-07 |website=www.moneysmart.gov.au |accessdate=2016-06-08}}</ref> Individual policies can vary in the amount of coverage they provide. The option to schedule your personal property is readily available.
'''Liability coverage'''
Liability is typically bundled together with building and contents coverage. Injuries and damage on premises would be covered by building coverage liability while any offsite occurrences would be covered under contents coverage.<ref name=":1" />
'''Common exclusions'''
As with most insurance policies, there are always exclusions. The most common are:<ref name=":1" />
* General wear-and-tear maintenance
* Faulty workmanship
* Mechanical or electrical breakdown
* Any amount over the limits shown on the policy schedule or in the policy
* Restricted cover when the home is empty or is let to tenants
==See also==
*[[Mortgage insurance]]
*[[Home equity protection]]
*[[Property insurance]]
*[[Renters insurance]]
==References==
{{Reflist}}
==External links==
{{Insurance}}
{{Authority control}}
[[Category:Types of insurance]]
'''Home insurance''', also commonly called '''homeowner's insurance''' (often abbreviated in the US real estate industry as '''HOI'''), is a type of [[property insurance]] that covers a [[private residence]]. It is an [[insurance]] policy that combines various personal insurance protections, which can include losses occurring to one's home, its [[Contents insurance|contents]], loss of use (additional living expenses), or loss of other personal possessions of the homeowner, as well as [[legal liability|liability]] insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.
Additionally, homeowner's insurance provides financial protection against disasters. A standard home insurance policy insures the home itself along with the things kept inside.
== Overview ==
Homeowner's policy is a multiple-line insurance policy, meaning that it includes both [[property insurance]] and [[liability insurance|liability]] coverage, with an indivisible premium, meaning that a single premium is paid for all risks. This means that it covers both damage to one's property and liability for any injuries and property damage caused by the owner or members of his/her family to other people. It may also include damage caused by household pets. The U.S. uses standardized policy forms that divide coverage into several categories. Coverage limits are typically provided as a percentage of the primary Coverage A, which is coverage for the main dwelling.<ref>Nance CP. (2003). ''Modern Real Estate Practice in Texas'' [https://books.google.com/books?id=wIVGVwTGZBMC&printsec=frontcover#PRA1-PA39,M1 p. 39].</ref>
The cost of homeowner's insurance often depends on what it would cost to replace the house and which additional endorsements or riders are attached to the policy. The insurance policy is a legal contract between the insurance carrier ([[insurance company]]) and the named insured(s). It is a contract of indemnity and will put the insured back to the state he/she was in prior to the loss. Typically, claims due to [[floods]] or war (whose definition typically includes a [[nuclear exclusion clause|nuclear explosion]] from any source) are excluded from coverage, amongst other standard exclusions (like termites). Special insurance can be purchased for these possibilities, including [[flood insurance]]. Insurance is adjusted to reflect the cost of replacement, usually upon application of an inflation factor or a cost index.
=== Pricing ===
{{Further|Replacement value#Home insurance in the United States}}
Major factors in price estimation include location, coverage, and the amount of insurance, which is based on the estimated cost to rebuild the home ("replacement cost").<ref name="Covered" />
If insufficient coverage is purchased to rebuild the home, the claim's payout may be subject to a [[co-insurance]] penalty. In this scenario, the insured will be subject to an out of pocket fee as a penalty. Insurers use vendors to estimate the costs, including [[CoreLogic]] subsidiary Marshall Swift-Boeckh, Verisk PropertyProfile, and E2Value, but leave the responsibility ultimately up to the consumer. In 2013, a survey found that about 60% of homes are undervalued by an estimated 17 percent.<ref>{{Cite web|title = Insurers Continue to Improve Their Home Valuations, Says MSB|url = http://www.insurancejournal.com/news/national/2013/08/12/301440.htm|website = www.insurancejournal.com|access-date = 2016-01-17}}</ref> In some cases, estimates can be too low because of "demand surge" after a catastrophe.<ref name="Covered" /> As a safeguard against a wrong estimate, some insurers offer "extended replacement cost" add-ons ("endorsements") which provide extra coverage if the limit is reached.<ref name="Covered" />
Prices may be lower if the house is situated next to a [[fire apparatus|fire station]] or is equipped with fire sprinklers and fire alarms; if the house exhibits wind mitigation measures, such as [[hurricane shutters]]; or if the house has a [[security system]] and has insurer-approved [[Lock (security device)|lock]]s installed.
Typically payment is made annually. [[Perpetual insurance]] which continues indefinitely can also be obtained in certain areas.
===Covered perils===
Home insurance offers coverage on a "named perils" and "open perils" basis. A "named perils" policy is one that provides coverage for a loss specifically listed on the policy; if it's not listed, then it's not covered. An "open perils" policy is broader in the sense that it will provide coverage for all losses except those specifically excluded on your policy.
'''Basic "named perils"'''<ref>{{cite web |url=https://www.irmi.com/online/insurance-glossary/terms/b/basic-causes-of-loss-form-iso.aspx |title=Basic causes of loss form (ISO) – Insurance Glossary {{!}} IRMI.com |website=www.irmi.com |accessdate=2016-06-07}}</ref> – this is the least comprehensive of the three coverage options. It provides protection against perils most likely to result in a [[total loss]]. If something happens to your home that's not on the list below, you are not covered. This type of policy is most common in countries with developing insurance markets and as protection for [[occupancy|vacant]] or unoccupied buildings.
Basic-form covered perils:
* [[Fire]]
* [[Lightning]]
* [[Storm|Windstorm]] or [[hail]]
* [[Explosion]]
* [[Smoke]]
* [[Vandalism]]
* Aircraft or [[traffic collision|vehicle collision]]
* [[Riot]] or civil commotion
'''Broad "named perils"'''<ref>{{cite web |url=https://www.irmi.com/online/insurance-glossary/terms/b/broad-causes-of-loss-form-iso.aspx |title=Broad causes of loss form (ISO) – Insurance Glossary {{!}} IRMI.com |website=www.irmi.com |accessdate=2016-06-07}}</ref> – this form expands on the "basic form" by adding 6 more covered perils. Again, this is a "named perils" policy. The loss must specifically be listed to receive coverage. Fortunately, the "broad form" is designed to cover the most common forms of property damage.
Broad-form covered perils:
* All basic-form perils
* Burglary, break-in damage
* Falling objects (e.g. tree limbs)
* Weight of ice and snow
* Freezing of plumbing
* Accidental water damage
* Artificially generated electricity
'''Special "all risk"'''<ref>{{Cite web|url=https://www.irmi.com/online/insurance-glossary/terms/s/special-perils.aspx|title=Special perils – Insurance Glossary {{!}} IRMI.com |website=www.irmi.com |accessdate=2016-06-07}}</ref> – special-form coverage is the most inclusive of the three options. The difference with "special form" policies is that they provide coverage to all losses unless specifically excluded. Unlike the prior forms, all unlisted perils are covered perils. However, if something happens to your home, and the event is on the exclusions list, the policy will not provide coverage.
Special-form excluded perils:
* Ordinance of law
* [[Earthquake]]
* [[Flood]]
* [[Power outage|Power failure]]
* [[Neglect]]
* [[War]]
* Nuclear hazard
* Intentional acts
== In the United States ==
[[File:YscloskBrownroofBuckets.jpg|thumb|right|A home in [[Louisiana]] damaged by [[Hurricane Katrina]]]]
In the [[United States]], most home buyers borrow money in the form of a [[mortgage loan]], and the mortgage lender often requires that the buyer purchases homeowner's insurance as a condition of the loan, in order to protect the bank if the home is 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 such a case 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.
Home insurance in the United States may differ from other countries; for example, in Britain, [[subsidence]] and subsequent foundation failure is usually covered under an insurance policy.<ref>{{cite web |last=Murphy |first=Kate |date=2010-03-03 |url=https://www.nytimes.com/2010/03/04/garden/04foundation.html |title=Shifting Soil Threatens Homes' Foundations |publisher=The New York Times |accessdate=2014-01-02}}</ref> United States insurance companies used to offer foundation insurance, which was reduced to coverage for damage due to leaks, and finally eliminated altogether.<ref>{{cite web|first=Jeffery |last=Ellison |url=http://www.essortment.com/articles/home-insurance-coverage_248.htm |title=Are home foundation repairs covered by insurance? |publisher=Webcite archive |accessdate=2014-01-02 |deadurl=yes |archiveurl=https://www.webcitation.org/5o9kTQvOg?url=http://www.essortment.com/articles/home-insurance-coverage_248.htm |archivedate=March 11, 2010 |df= }}</ref> The insurance is often misunderstood by its purchasers; for example, many believe that mold is covered when it is not a standard coverage.<ref>[http://www.insurancejournal.com/news/national/2013/05/14/291804.htm Homeowners Confused About Insurance Coverage: Survey]. InsuranceJournal.com</ref>
=== History ===
The first homeowner's policy ''per se'' in the United States was introduced in September 1950, but similar policies had already existed in Great Britain and certain areas of the United States. In the late 1940s, US [[insurance law]] was reformed and during this process multiple line statutes were written, allowing homeowner's policies to become legal.<ref>{{cite web |first=Frederick J. |last=Hunt, Jr. |year=1962 |url=http://www.casact.org/pubs/proceed/proceed62/62012.pdf |title=Homeowners – The First Decade |journal=Proceedings of the Casualty Actuary Society |accessdate=2014-01-02}}</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.<ref>{{note label|PI|2002: 5.3–5.4|none}}{{cite book | last = Wiening | first = Eric |author2=George Rejda |author3=Constance Luthardt |author4=Cheryl Ferguson | title = Personal Insurance |edition = 1st |year = 2002 | publisher = American Institute for Chartered Property Casualty Underwriters/Insurance Institute of America | location = [[Malvern, Pennsylvania]] | isbn = 0-89463-108-X}}</ref>
The need for standardization grew so great that a private company based in [[Jersey City]], [[New Jersey]], [[Insurance Services Office]], also known as the ISO, was formed in 1971 to provide risk information and it issued simplified homeowner's policy forms for reselling to insurance companies. These policies have been amended over the years.{{citation needed|date=January 2014}}
Modern developments have changed the insurance coverage terms, availability, and pricing.<ref name=Covered>[http://money.cnn.com/2013/04/12/real_estate/homeowners-insurance.moneymag/index.html?iid=EL Covered by homeowners insurance? Don't be so sure]. CNN Money. [https://www.webcitation.org/6G6HVaiTp?url=http://uphelp.org/news/covered-homeowners-insurance-dont-be-so-sure/2013-04-15 WebCite archive].</ref> Homeowner's insurance has been relatively unprofitable, due in part to catastrophes such as hurricanes as well as regulators' reluctance to authorize price increases.<ref name=Covered/> Coverages have been reduced instead and companies have diverged from the former standardized model ISO forms.<ref name=Covered/> Water damage due to burst pipes in particular has been restricted or in some cases entirely eliminated.<ref name=Covered/> Other restrictions included time limits, complex replacement cost calculations (which may not reflect the true cost to replace), and reductions in wind damage coverage.<ref name=Covered/>
=== Coverage rates ===
According to a 2015 [[National Association of Insurance Commissioners]] (NAIC) report on data from 2012, 76.8% of homes were covered by owner-occupied homeowners' policies. Of these, 62.9% had the HO3 Special, and 9.4% had the more expensive HO5 Comprehensive. Both of these policies are "all risks" or "open perils", meaning that they cover all perils except those specifically excluded. 2.7% were the HO2 Broad, which covers only specific named perils. Others, at about 1% each, include the HO1 Basic and the HO8 Modified, which is the most limited in its coverage. HO8, also known as older home insurance, is likely to pay only actual cash value for damages rather than replacement.<ref name=":4">{{Cite web|url=http://www.naic.org/prod_serv/HMR-ZU-14.pdf|title=Dwelling Fire, Homeowners Owner-Occupied, Homeowners Tenant, Condominium/Cooperative, and Unit Owners Insurance: Data for 2012|website=NAIC.com|publisher=National Association of Insurance Commissioners|access-date=2016-06-14}}</ref>
The remaining 21.3% of home insurance policies were covered by renter's or condominium insurance. 14.8% of these had the HO-4 Contents Broad form, also known as renters' insurance, which covers the contents of an apartment not specifically covered in the [[blanket policy]] written for the complex.<ref name=":4" /> This policy can also cover liability arising from injury to guests as well as negligence of the renter within the coverage territory. 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. The remainder had the HO-6 Unit-Owners policy, also known as a condominium insurance, which is designed for the owners of condos and includes coverage for the part of the building owned by the insured and for the property housed therein. Designed to span the gap between the coverage provided by the blanket policy written for the entire neighborhood or building and the personal property inside the home. The condominium association's by-laws may determine the total amount of insurance necessary. E.g., in [[Florida]], the scope of coverage is prescribed by statute – 718.111(11)(f).<ref>{{cite web|url=http://www.flsenate.gov/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=Ch0718/Sec111.HTM|title=Flsenate Archive: Statutes & Constitution
> View Statutes|author=|date=|website=www.flsenate.gov}}</ref>
=== Causes of loss ===
According to the 2008 [[Insurance Information Institute]] factbook, for every $100 of premium, in 2005 on average $16 went to fire and lightning, $30 to wind and hail, $11 to water damage and freezing, $4 for other causes, and $2 for theft. An additional $3 went to liability and medical payments and $9 for claims settlement expenses, and the remaining $25 was allocated to insurer expenses.<ref>{{cite book |title=The I.I.I. Insurance Fact Book 2008 |url=https://books.google.com/books?id=BTUYjpQVPA0C&pg=PA85#v=onepage&q&f=false |page=85 |accessdate=2014-01-02}}</ref> One study of fires found that most were caused by heating incidents, although smoking was a risk factor for fatal fires.<ref>{{cite journal |vauthors=Runyan CW, Bangdiwala SI, Linzer MA, Sacks JJ, Butts J |title=Risk factors for fatal residential fires |journal=N. Engl. J. Med. |volume=327 |issue=12 |pages=859–63 |date=September 1992 |pmid=1508246 |doi=10.1056/NEJM199209173271207 |url=}}</ref>
=== Claims process ===
After a loss, the insured is expected to take steps to mitigate the loss. Insurance policies typically require that the insurer be notified within a reasonable time period. After that, a [[claims adjuster]] will investigate the claim and the insured may be required to provide various information.
Filing a claim may result in an increase in rates, or in nonrenewal or cancellation. In addition, insurers may share the claim data in an industry database (the two major ones are CLUE and A-PLUS<ref>[http://www.iso.com/Products/A-PLUS/A-PLUS-Property-Database-claims-info-for-underwriting.html A-PLUS Property Database] {{Webarchive|url=https://web.archive.org/web/20130516040227/http://www.iso.com/Products/A-PLUS/A-PLUS-Property-Database-claims-info-for-underwriting.html |date=2013-05-16 }}. ISO.</ref>), with Claim Loss Underwriting Exchange (CLUE) by [[Choicepoint]] receiving data from 98% of U.S. insurers.<ref>[http://www.bankrate.com/finance/insurance/claims-that-boost-your-insurance-rates-1.aspx Claims that boost your insurance rates]. Bankrate.com.</ref>
== In the United Kingdom ==
As in the US, mortgage lenders within the [[United Kingdom]] (UK) require the rebuild value (the actual cost of rebuilding a property to its current state should it be damaged or destroyed) of a property to be covered as a condition of the loan. However, the rebuild cost is often lower than the market value of the property, as the market value often reflects the property as a going concern, as opposed to just the value of the bricks and mortar.
A number of factors, such as an increase in fraud and increasingly unpredictable weather, have seen home insurance premiums continue to rise in the UK.<ref>http://www.theaa.com/services/insuranceandfinance/insuranceindex/</ref> For this reason, there has been a shift in how home insurance is bought in the UK—as customers become a lot more price-sensitive, there has been a large increase in the amount of policies sold through price comparison sites.
In addition to standard home insurance, some 8 million households in the UK are categorized as being a "non-standard" risk. These households require a specialist or non-standard insurer that would cover home insurance needs for people that have criminal convictions and/or where the property suffers subsidence or has previously been underpinned.
== Around the world ==
'''Premium volume by country (2013)'''
{| class="wikitable"
!World rank<ref name=":3">{{Cite web|url=https://www.abi.org.uk/Insurance-and-savings/Industry-data/Key-Facts-2014|title=UK Insurance Key Facts 2014 ABI|website=www.abi.org.uk|access-date=2016-06-14}}</ref>
!Country
!Region
!Premium volume (2013, USD Mil):<ref name=":3" />
|-
|1
|United States
|Americas
|1,259,255
|-
|2
|Japan
|Asia
|531,506
|-
|3
|United Kingdom
|Europe
|329,643
|-
|4
|China
|Asia
|277,965
|-
|5
|France
|Europe
|254,754
|-
|6
|Germany
|Europe
|247,162
|-
|7
|Italy
|Europe
|168,544
|-
|8
|South Korea
|Asia
|145,427
|-
|9
|Canada
|Americas
|125,344
|-
|10
|Netherlands
|Europe
|101,140
|}
'''Building and contents coverage'''
Countries such as [[China]], [[Australia]], and the [[United Kingdom]] use a more straightforward approach to home insurance, called "building and contents coverage" commonly referred to as "home and contents insurance". Relative to the insurance policies of the United States, building and contents coverage offers a very basic level of coverage. Most standard policies only cover the most basic perils listed below:
* Storm or flood
* Fire
* Lightning or explosion
* Falling trees or branches
* Subsidence, drag or landslip
* Breakage of glass or sanitary fittings
* Damage from escaped water or oil
* Shock caused to the house by animals, vehicles or aircraft
'''Building coverage'''
Building covers both the primary structure as well as detached structures such as garages, sheds, and back houses that are on property. However, different insurers may not cover things like boundary walls, fences, gates, paths, drives or swimming pools, so it is important to check the specific policy language.<ref name=":1">{{Cite web|url=https://www.abi.org.uk/Insurance-and-savings/Products/~/media/2BFFB3476ABF449984B137EF43F1B335.ashx|title=Guide to Home Buildings and Contents Insurance|date=|website=https://www.abi.org.uk|publisher=Association of British Insurers|access-date=}}</ref> This is an equivalent of both Coverage A and B in homeowners insurance policies in the United States.
'''Contents coverage'''
Contents insurance covers personal effects such as furniture, clothes, electronics, jewelry, etc. Most policies limit the individual amount of money paid out for each category of items.<ref>{{Cite web|url=https://www.moneysmart.gov.au/insurance/home-and-contents-insurance#contentspolicy |title=Home & contents insurance – ASIC's MoneySmart |author=Australian Securities & Investments Commission |date=2016-01-07 |website=www.moneysmart.gov.au |accessdate=2016-06-08}}</ref> Individual policies can vary in the amount of coverage they provide. The option to schedule your personal property is readily available.
'''Liability coverage'''
Liability is typically bundled together with building and contents coverage. Injuries and damage on premises would be covered by building coverage liability while any offsite occurrences would be covered under contents coverage.<ref name=":1" />
'''Common exclusions'''
As with most insurance policies, there are always exclusions. The most common are:<ref name=":1" />
* General wear-and-tear maintenance
* Faulty workmanship
* Mechanical or electrical breakdown
* Any amount over the limits shown on the policy schedule or in the policy
* Restricted cover when the home is empty or is let to tenants
==See also==
*[[Mortgage insurance]]
*[[Home equity protection]]
*[[Property insurance]]
*[[Renters insurance]]
==References==
{{Reflist}}
==External links==
{{Insurance}}
{{Authority control}}
[[Category:Types of insurance]]
