The Types of Homeowner’s Insurance Policies
You have several homeowner’s insurance policies to choose from when buying a policy. The types or ‘forms’ typically depend on the type of property you purchase and the type of coverage you need. While coverage can vary by state as each state has different laws, you can get a general idea of each type of policy below.
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HO-1 insurance is ‘basic insurance.’ Insurance companies call it a ‘named peril policy.’ In other words, if the peril isn’t listed, it’s not covered. The policies cover only the following perils:
- Fire or explosions
- Wind or hail
- Damage from cars or aircraft
HO-1 policies don’t cover personal belongings in your home. If you want coverage for your personal belongings, you must add the coverage at the time that you purchase the policy. This coverage doesn’t include personal liability insurance if someone sues you or gets hurt on your property.
HO-2 Policies are broad form policies. It includes all of the coverage from above, plus coverage for a few other incidents:
- Damage from fallen objects
- Water damage from plumbing systems
- Damage from ice or snow
- Damaged plumbing systems
HO-2 policies often include coverage for personal belongings inside the home as well as liability insurance. HO-2 is a ‘named peril policy’ though, so the peril must be listed in order for your incident to be covered.
HO-3 insurance is the most common form of homeowner’s insurance. It covers everything in H0-1 and HO-2 and more.
This is not a ‘named peril policy.’ You get more protection with this coverage. Basically, all perils are covered, unless there is a written exclusion in the policy. The most common exclusions are flood and earthquake damage.
Your home and any attached structures are typically covered. If you experience a covered peril, your personal belongings are also covered. You also get personal liability should you cause damage to someone else or another person’s property.
Each HO-3 is different, so make sure you ask specific questions and read the fine print before accepting a policy.
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This policy is called ‘tenant’s form.’ It covers personal belongings inside the rental unit as well as personal liability if someone gets hurt on your property or you damage someone else’s property. This policy does not cover the unit itself – that’s the property owner’s responsibility. Many renter’s policies also include a provision for additional living expenses should your rental unit become unlivable.
This comprehensive form insurance mimics the HO-3 policy but with a little more. It covers personal belongings to a greater extent. You get slightly broader coverage with fewer exceptions than the HO-3 policy, but it comes at a greater expense. HO-5 policies still have exclusions, but they aren’t as great as those in an HO-3 policy.
This is condo insurance. Like renter’s insurance, it protects your personal belongings inside the unit, but it goes a step further. Condo insurance covers the interior components of the unit, including the walls, ceilings, and floors.
You get similar coverage as the HO-3 as far as perils, but for your unit. The HO-6 doesn’t cover the exterior components of the condo, though. The condo development or HOA must provide insurance for the shared components, including the exterior of the property.
Condo insurance typically includes liability protection and additional living expense coverage as well.
This policy covers mobile homes. It provides the same coverage as your HO-3 policy of single-family homes, but for mobile homes. This insurance does not pertain to RVs; it is only for mobile homes that are permanently in the ground.
This last policy is for older homes. If your home will cost more than the actual cash value of the home, you may want this coverage. It’s mostly for historic homes and registered landmarks. This policy provides financial protection should your home have total destruction. HO-8 only covers the perils in HO-1 though.
Talk with your insurance agent at length about the type of insurance you need. Most homeowners opt for the HO-3 policy, but if you have specific needs or a unique type of home, you may need a different policy. Talk specifically about the covered perils and about any extra coverage you may need for exclusions listed in the policy.
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