First-time homebuyers are often brought up short by the lender's requirement that the property must be protected by "hazard" insurance, usually in an amount high enough to pay off the mortgage if the place burns down. Otherwise, the lending institution could be left with no security for its loan.

The whole concept may be new to those who never carried renter's insurance on their old apartments. They may feel that as tenants they never had anything worth insuring, completely overlooking the computers, stereo equipment, skis and other items that would be hard to replace in case of fire -- and renter's insurance is relatively inexpensive.

At any rate, the bank wants that hazard insurance, but most homeowners opt for a package that protects against additional problems, including theft of personal property, and liability coverage for those injured on the premises.

The "basic" form of homeowners insurance, known as HO-1, provides coverage against damage by fire or lightning, glass breakage, windstorm or hail, explosion, riot or civil commotion, damage by aircraft, vehicles, or smoke, vandalism, malicious mischief and theft, as well as liability for injuries to others on the property.

"Broad" coverage, HO-2, adds hazards like falling objects, weight of ice, snow and sleet, freezing and other single occurrences in heating, plumbing, electrical and air-conditioning systems.

Further coverage is provided by "comprehensive" form HO-3, the most widely-used type, and HO-5, the most expensive. In general, they cover all hazards except flood, earthquake, war and nuclear attack.

Other policies include HO-4, the coverage designed for apartment renters, and HO-6, a broad-form policy for condominium owners.

In each case, personal property is protected in a certain ratio to the coverage purchased for the building itself. Most policies include a co-insurance clause, providing that unless the homeowners carry coverage equal to at least 80 percent of the building's replacement value, claims will not be paid in full. In any case, of course, payment could not exceed the face value of the policy.

As with automobile insurance, considerable savings can be realized if policyholders agree to bear small losses themselves. There's no point in bothering the insurance company for minor problems, and increasing the deductible amount by bearing the first $500, $1,000 or $2,000 on one's own holds down premiums.

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