For you, as for most Americans, your home is your largest and most important investment. Homeowners insurance, required by mortgage lenders, protects you from losing the value of your Mobile Eastern Shore real estate if disaster strikes and enables you to repair or rebuild the structure. It covers damage to your home (real property) and your personal belongings (personal property) for the hazards specified in your policy. It also covers your liability for any injuries and property damage that you or your family members (including pets) cause to other people.

Types of homeowners insurance:

• HO-1 is very basic coverage, insuring against fire or lightening damage

• HO-2, called “broad coverage,” also covers loss of or damage to property resulting from windstorm or hail, theft, explosion, smoke damage from vehicles and aircraft, glass breakage, removal of property endangered by covered peril such as fire, vandalism, malicious mischief, and riot or civil commotion. HO-2 also covers building collapse, freezing of or accidental discharge of water or steam from within plumbing, heating, or air-conditioning, falling objects, weight of snow, ice, or sleet, and rupture or bursting of steam or hot water heating system

• HO-3, called the “special” form, insures your home and detached structures against loss or damage from any peril except for those specifically excluded in the policy. This is the policy most homeowners purchase. It is important for you to read your policy carefully to see what is excluded—you may want to cover exclusions with special endorsements.

• HO-4 is a tenant’s policy and insures your household contents and personal belongings against the perils of the HO-2 policy. It also covers additional living expenses if needed, medical payments, and also liability protection.
  

• HO-6 covers a condominium unit-owner who wishes to insure items not insured by the association policy, as well as the personal property inside the unit and personal liability protection.

• HO-8 is the “older home” policy. Having an older home may preclude your being able to buy a replacement policy; you may have to buy a modified replacement policy instead. This means that instead of replacing such older home materials as plaster walls for example, the policy will pay for standard building materials and processes in use now.

Some states designate their forms differently, using such titles as HO-A, HO-B, etc., but the coverage is generally the same.

Types of replacement policies:

• Actual cash value policies pay to replace your Mobile Eastern Shore real estate holdings and possessions, minus depreciation, up to the limit

• Replacement cost policies pay the actual cost of rebuilding or repairing your home and replacing your possessions up to the policy limit. No deduction for depreciation.

• Guaranteed replacement cost policies pay whatever it costs to rebuild your home as it was before the damage occurred even if it exceeds the policy limit.

• Extended replacement cost policies pay a specified percentage over the policy limit to rebuild your home. Usual percentages are 20%-25.

How much insurance do you need for your Mobile Eastern Shore real estate holdings? The Insurance Information Institute suggests that you first need enough to cover the cost of rebuilding your house at today’s construction cost. Note: this does not include the cost of the land. Some lenders require only that you have enough to cover the cost of your mortgage, but that figure may be inadequate to cover your home’s value. In addition to the value of the structure itself, you will also need coverage for your possessions, living expenses if you have to live somewhere else for a period of time, and any liability you may incur. Your insurance agent can advise you as to the type and amount of insurance that would best suit your needs.