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When Does Homeowners Insurance go Into Effect?

By Mary Lamphere

Your decision to purchase a home is probably one of the biggest decisions you'll ever make. Homeowners insurance is crucial to protecting your investment. Before signing on the dotted line, ask your insurance company what your homeowners insurance policy will cover and exactly when that coverage will go into effect to ensure you understand your rights, your risks and your coverage details.

Homeowners Insurance Effective Date

No matter what type of insurance policy you get or how much you pay, the coverage will not go into effect until the insurance company has accepted your application and you have paid your initial premium. Some insurance companies will require that you actually move into the home to permanent live there before the policy takes effect while others may have limited stipulations as long as you have paid the first premium up-front.

Inventory

Upon moving into your home, it's important to take a complete inventory of your belongings and personal possessions. Video or digital inventory works best because you can save a copy of the inventory to a database backup online and you can store a copy for your own records in a safe place. Describe each of your belongings in great detail and whenever possible include receipt photocopies, contracts or appraisals with the item as you take the inventory. This will all help you to back up your insurance claim should you ever suffer a loss due to damage or theft and need to file a claim.

Policy Types and Coverage Options

As a homeowner, your insurance company will offer a number of different types of homeowners insurance policies and coverage options to meet your needs. The most common policy types include:

  • HO2 policies which is basic coverage for most disasters
  • HO3 policies which cover most hazards except for those which are specifically eliminated from coverage such as floods, earthquakes and nuclear accidents
  • HO4 policies which cover a renter's personal property with a liability clause
  • HO6 policies which cover personal property in a condo as well as loss of use

The coverage that you receive typically includes coverage in the event that there is damage to the property and the contents inside as well as a liability protection. The coverage is broken down into the following four categories:

  • structure which covers repair costs or home replacement
  • personal belongings which covers 50-70% of personal belongings
  • Liability protection which provides coverage for $100,000 and up
  • living expenses which provides coverage up to 20% of the total insurance policy if you are required to live away from the home while damages are being repaired
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