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Are there different types of homeowners insurance?

Yes, there are different types of homeowners insurance, based on where you live, what kind of structure you live in (regular house or mobile home, for instance), which insurance company you use and how much coverage you're willing to pay for. Most homeowners end up getting an HO-3 policy that covers your house against damage and theft and protects you from personal liability if someone tries to sue you for damage he sustained while in your house. Homeowners insurance doesn't cover wear and tear or problems you caused yourself by neglecting basic home maintenance. Although it does cover most natural disasters, you usually have to buy separate coverage for floods and earthquakes. If your area is prone to these natural disasters, it makes sense to get that coverage, and fast!

Before you even buy a house, it's worth researching the neighborhood where you'll be living to check out crime rates or if the house in the past has been plagued by flooding, so you'll know what kind of coverage you need from your policy. If you are unable to continue living at your house due to a natural disaster that your policy covers, you should be able to have the policy pay for rental expenses while you live somewhere else.

Depending on what kind of valuable possessions you own, you may want to purchase separate coverage for them. In addition, maintaining your home and installing burglar alarms can result in lower premiums. Homeowners in some Atlantic and gulf states are eligible for coverage if their homes are damaged by hurricanes or other storms, while homeowners in some other states can get Fair Access to Insurance Requirement (FAIR) Plans, covering damage due to fire, riots and vandalism.