Home insurance, or homeowners insurance, is an insurance policy that combines insurance on the home, its contents, loss of use (additional living expenses) and, often, the other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home.
The cost of homeowners insurance scales upward depending on what it would cost to replace the house, and which additional "riders", meaning additional items to be insured, are attached to the policy.
The insurance policy itself is a lengthy contract, and names what will and what will not be paid in the case of various events.
Typically, claims are not paid due to earthquakes, floods, "Acts of God", or war (whose definition typically includes a nuclear explosion from any source).
Special insurance can be purchased for these possibilities, including flood insurance and earthquake insurance.
The home insurance policy is usually a term contract, which is a contract that is in effect for a fixed period of time.
The payment the insured makes to the insurer is called the premium.
The insured must pay the insurer the premium each term.
Most insurers charge a lower premium if it appears less likely the home will be damaged or destroyed.
In the United States, most home buyers borrow money in the form of a mortgage, and the mortgage lender always requires that the buyer purchase homeowners insurance as a condition of the loan, in order to protect the bank if the home were to be destroyed.
