What are the characteristics of home owner's insurance?

Answer 1

Homeowners insurance generally has two main components. One is "liability" protection, and the other is "property" protection.

The liability part of the coverage protects the insured from personal liability to a third-party if that party's loss results from a covered occurrence. That is, like most other kinds of insurance, protection is not provided for all types or causes of loss, but instead, those stated in the policy. Additionally, for the coverage to apply, the insured, must comply with the requirements of the policy, including continuous payment of premium to keep the policy in force, and timely notification of the insurer of a loss.

If the liability coverage applies to the loss, and all conditions precedent have been met, the insurer's obligations include investigating the facts, defending you in the event of a lawsuit from the occurrence, and paying damages for which you are found to be legally liable (up to the amount of coverage available under the policy).

The property protection of a homeowners policy covers stated physical damage to the insured premises resulting from a covered cause of loss. It may also include coverage for a stated dollar amount of contents, and it may reimburse the insured for certain expenses incurred if the premises must be vacated and alternate living accommodations sought (so-called ALE coverage). Typically, the amount of the ALE reimbursement is based upon the difference between living expenses usually incurred while living in the insured premises, and those incurred while living in the alternate location.

The property protection is normally subject to a deductible, while the liability protection is not. The amount of the deductible is selected when application for the policy is made.