Our homes contain a lot of valuable things. We have electronic goods, sports equipment, valuables and other things in the house which can get damaged or lost. To safeguard our homes and their contents we should buy home insurance and relax, knowing that our things are safe and cared for and that if anything happens to them, the insurer will settle the claim and they can be replaced or repaired.

Home insurance is also called hazard insurance or homeowners insurance and is a property insurance that covers private homes. It is a contract between an insurer and an insured made for a specific time and specific face value. The insurer promises to pay the insured the pre decided amount if the home is damaged or if its contents are damaged or lost due to accidents, thefts, natural disasters and the like. Some insurers do not cover floods, earthquakes, wars or bomb explosions for which you may have to buy an additional insurance or a special one.

Before the contract is signed the insurer may have a survey done to satisfy the terms of the contract. There may be an appraisal also. You have to read the contract properly and assure yourself that everything you value has been covered and insured. A list is made of the items that are insured so that there is no difference of opinion later. In return the insured person has to pay a certain amount of money at specified periods according to the face value of the policy and other considerations. This payment is called a premium and is decided before signing the contract.

If your house is safer, that is, if your house is near a fire station and is equipped with fire alarms and fire extinguishers, your premium may be lesser as your house has less chances of being damaged by fire. In the US, before the 1950s the insurer needed to buy separate policies for separate reasons. There was a separate policy for fire, a separate one for theft and so on. But after the 1950s it was felt that a comprehensive home insurance was the need of the hour and accordingly, all were merged into one. However you have to still read the policy thoroughly before signing it. The policy has to be updated at regular intervals and the cost of the insured items has to be updated.

When you borrow money and the house is mortgaged, normally a home insurance is included in it.