Home and Renters Insurance

The first homeowner’s policy in the United States was introduced in September 1950, but similar policies had already existed in Great Britain and certain areas of the United States.  In the late 1940s, US insurance law was reformed and during this process multiple line statutes were written, allowing homeowner’s policies to become legal.

Prior to the 1950s there were separate policies for the various perils that could affect a home.  A homeowner would have had to purchase separate policies covering fire losses, theft, personal property, and the like.  During the 1950s policy forms were developed allowing the homeowner to purchase all the insurance they needed on one complete policy.  However, these policies varied by insurance company, and were difficult to comprehend.

Homeowner’s policy is a multiple-line insurance policy, meaning that it includes both property insurance and liability coverage, with an indivisible premium, meaning that a single premium is paid for all risks.  The U.S. uses standardized policy forms that divide coverage into several categories. Coverage limits are typically provided as a percentage of the primary Coverage A, which is coverage for the main dwelling.

You have to find out what the regulations are in the country that you live.  Insurance is different all over the world. 

The cost of homeowner’s insurance often depends on what it would cost to replace the house and which additional endorsements or riders are attached to the policy.  The insurance policy is a legal contract between the insurance carrier (insurance company) and the named insured(s).  It is a contract of indemnity and will put the insured back to the state he/she was in prior to the loss.

Renters Insurance also falls under this category of insurance.  The big difference is that renters insurance covers only all the contents of the person who is renting the home. It is the home owners responsibility to have insurance on the building.

In the United States, most home buyers borrow money in the form of a mortgage loan, and the mortgage lender often requires that the buyer purchases homeowner’s insurance as a condition of the loan, in order to protect the bank if the home is destroyed.  Anyone with an insurable interest in the property should be listed on the policy.  In some cases the mortgagee will waive the need for the mortgagor to carry homeowner’s insurance if the value of the land exceeds the amount of the mortgage balance.  In such a case even the total destruction of any buildings would not affect the ability of the lender to be able to foreclose and recover the full amount of the loan.

Home Owners Insurance in the United States may differ from other countries; for example, in Britain, subsidence and subsequent foundation failure is usually covered under an insurance policy.

Mortgage lenders within the United Kingdom (UK) require the rebuild value (the actual cost of rebuilding a property to its current state should it be damaged or destroyed) of a property to be covered as a condition of the loan. However, the rebuild cost is often lower than the market value of the property, as the market value often reflects the property as a going concern, as opposed to just the value of the bricks and mortar.

A number of factors, such as an increase in fraud and increasingly unpredictable weather, have seen home insurance premiums continue to rise in the UK.  For this reason, there has been a shift in how home insurance is bought in the UK—as customers become a lot more price-sensitive, there has been a large increase in the amount of policies sold through price comparison sites.

 Countries such as China, Australia, and England use a more straight forward approach to home insurance, called “building and contents coverage” commonly referred to as “home and contents insurance”.  Relative to the insurance policies of the United States, building and contents coverage offers a very basic level of coverage.


Typically, claims due to floods or war (whose definition typically includes a nuclear explosion from any source) are excluded from coverage, amongst other standard exclusions (like termites).  Special Insurance can be purchased for these possibilities, including flood insurance.  Insurance is adjusted to reflect the cost of replacement, usually upon application of an inflation factor or a cost index.

Who would have even thought before 9/11 that we would be talking about insurance that would cover Terrorism!

Times have changed in the world today and we don’t know what is really covered or not covered in our insurance policies.

As the saying goes with any type of insurance, you really don’t know how good your insurance policy is until you go and use it.

It is important that we have at the very least basic coverage on our homes and contents.  If we don’t it is like playing Russian Roulette with a pistol.  It is an accident waiting to happen.

Please let me know of your thoughts by sending me an email.


Thank you,