Home insurance is also called hazard insurance or homeowners insurance and is bought to protect your home and its contents. You buy a house with your hard earned money or from borrowed money and naturally you would like it to be safe and protected. A home insurance is bought to protect your home. It is a contract signed by the insurer and the insured for a certain amount and for a certain period.
Home insurance is a property insurance which covers private homes. The contract has to be updated also at regular intervals and the value of the items insured has to be revalued. Before the insurance policy is issued there is generally an appraisal by the insurer. Also there are many items to be read and verified. Generally home insurance is bought to protect your home from fire, damage, theft, or damages due to accident, natural disasters like floods or earthquakes, war or bomb explosions. However there are certain insurers who will have specific rules and regulations on deciding what things are to be insured and what are not. And this can run up to a long list. You have to read the policy thoroughly before buying it. If you want insurance against floods and natural disasters you may have to buy a separate policy as a home insurance policy normally does not cover such things.
In return you have to pay an amount of money at fixed intervals. This is called the premium. It can be fixed for monthly, quarterly, half yearly or annual payments. It will be calculated on the face value of the policy and on the valuable assets which are mentioned in the policy. There are discounts offered to home owners whose homes are near a fire station or those who have fire extinguishers and smoke alarms installed in their homes. In such cases the damages are naturally less than what they would be if these items were not there.
Most people in the US buy homes by borrowing money from certain agencies and the house is mortgaged to them. The mortgager normally includes a home insurance policy while signing the mortgage deed so that the house will be safe. If some damage to the property takes place, then the insured person can put in a claim for the losses incurred and the insurance policy insurer has to settle the claims.
Before the 1950s, people in the US had to buy different policies for different items. Thus there were different policies for thefts, for damages and so on. But after that there was felt a need for a comprehensive policy which is now offered by many insurers.