You have just recently purchased your home, which is a great thing. You will finally have your own place where you’ll get to do whatever your heart desires. However, your obligations when it comes to this do not end there.
I mean, that should be your case if you want to secure yourself and your house from sudden expenses. If that is the case, then you should definitely take homeowners insurance into consideration.
But what do we know about it? I mean, there are so many aspects of it (mostly referring to the different types of insurance policies) that need to be covered in order to make things a bit clearer. And that is precisely what I will do today. So if you want to know more, then keep reading!
Different Types Of Homeowners Insurance
Before I speak about each of them separately, I will first enumerate below the most common types of it. But before I do that, if by any chance you still have not bought your home because you haven’t found the right website where you’ll be able to properly browse all the properties, then I’ve got a great suggestion for you!
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Now, let’s go back to various types of homeowners’ insurance that you can opt for depending on your needs. They include:
- HO-1: Basic Form
- HO -2: Broad Form
- HO-3: Special Form
- HO-4: Contents Broad Form
- HO-5: Comprehensive Form
- HO-6: Unit-owners Form
- HO-7: Mobile Home Form
- HO-8: Modified Coverage Form
Let’s Begin With HO1
What do we know about it? Namely, this type of homeowners’ insurance is also known as the most basic form of insurance, and it honestly is (particularly if we compared it with others). If you decide to obtain it, then your household will normally be covered at its actual monetary value.
At times, personal belongings can be covered with it as well, however, that is unfortunately rarely the case. So what does it cover then? It typically covers only the loss or damage that was caused by these perils:
- Fire or lightning
- Hail or windstorm
- Civil commotion or riot
- Vehicles
- Aircraft
- Vandalism
- Smoke
- Burglary
- Volcanic eruptions
If there were some losses that weren’t caused by any of the aforementioned perils, then do not expect this insurance to cover them. So who can make use of it? Well, this policy simply isn’t effective enough, because as you can see it doesn’t cover some common occurrences (like damage that was caused by failing objects or ice on a roof) a vast majority of insurance carriers have decided to give up on it because they don’t find it useful for a lot of homeowners.
Moving On To HO-2 Insurance Policy
So what can I tell you about it? Namely, this one offers coverage for a lot more perils in comparison to the HO-1 policy. This one includes all perils that were part of the HO-1, plus:
- Weight of ice and snow
- Accidental discharge or overflow of steam or water
- Cracking that was caused by a sudden or unplanned event
- Freezing of plumbing, air conditioning
- Falling objects
- Accidental damages that were caused by artificially generated electrical current
Apart from these things that I just mentioned, it also includes the following:
- Dwelling coverage for your property and other structures that are on it
- Personal liability
- Coverage for the items that are in your possession
- Loss of use or extra living costs coverage
- Medical payments intended for others
Also, I would like to add that when I say that your personal belongings are covered, I mean that you will receive money for them once their value is determined after depreciation.
Discussing The HO-3 Policy
According to the statistics, this is by far the most common type of homeowners’ insurance, which involves belonging, dwelling, and liability coverage. So what does it mean? It means that your insurance company is going to provide you with financial help whenever you decide that you will fix or replace your house’s structure (which includes additional structures on your property too), your personal belongings (even if they are not in your home), along with expenses that are linked with injuries that happened in your household.
This refers to both guest and resident injuries, along with protection in the event of legal action. Special form homeowners’ insurance includes an open peril policy for dwelling safeguard.
Even though this means that the structure of your property is covered for various types of damage, your personal belongings are actually part of the named peril policy. Furthermore, special form protection for personal belongings doesn’t usually cover events like floods, earthquakes, mudslides, government seizures, ordinance updates, sinkholes, and sewer backups.
HO-4: Contents Broad Form
So what can be said about this one? Among homeowners, this one is known as renter’s insurance. So what does it mean? It means that its policies are intended for those who lease or rent an apartment, condo, or house.
But what does it cover then? It includes a renter’s personal property (at its replacement expense) against the same perils that I’ve mentioned in the HO-3 policy. Apart from that, this policy will cover the living expenses, if by any chance the place you rent suddenly becomes unbearable because of the damage that was caused by some peril, such as fire, and you want to live somewhere else.
“Renter’s insurance, also known as HO-4, is a crucial form of protection for tenants. In the event of a disaster, such as a fire, having this policy can make all the difference in recovering from a burn damage insurance claim.” – Lawyer from Leader, Leader, & Zucker PLLC
What about liability coverage? When it comes to this, it may or may not provide coverage for it.
Discussing The HO-5 Home Insurance Policy
This one was also known as a comprehensive policy, and it provides the highest level of insurance coverage when it comes to personal belongings and households. Moreover, it covers your belongings and home under practically every circumstance except those that were described as exclusions.
To make things simpler, the exclusions that were mentioned in the HO-3 policy are the same as the ones here. This policy will give money for replacement expenses rather than actual money value.
In addition, it also includes coverage for medical payments for other people, liability, and other additional living costs. This type of insurance policy is perfect for ensuring brand-new construction, however, keep in mind that not every insurance company offers it.
HO-6 Insurance Policy
This one covers the structure of the condo, the stuff that was inside, and also the owner’s personal liability. Additionally, it normally covers common occurrences like damage from an aircraft, explosions, hail, fire, civil commotion or riots, lighting, burglary, smoke, windstorms, and vandalism.
So what is the smartest thing to do when buying a condo? If you ask me, I would first do my homework and tried to figure out what protection my building owner will offer. While a vast majority of complex owners will safeguard external walls and common places like trash rooms, and hallways, it still wouldn’t hurt to ask these questions just so you can get your facts straight one hundred percent.
This way, you will make sure you aren’t giving more money than you’re supposed to for coverage, or that there aren’t any holes in your protection in case, God forbid, a natural disaster or an emergency happens.
Basic Information About HO-7
So what do we know about this one? Namely, this one was essentially made with the goal to offer the same coverage that you receive from HO-3, but for the mobile house. How come? Well, that is because mobile homes aren’t normally covered under this policy, because it is intended for single-family homes.
These policies can be called mobile home policies (MHP) too. So what does it include? They give coverage for different structures, such as:
- Single- and double-wide manufactured houses
- Trailers (including fifth-wheel trailers and travel trailers)
- Single- and double-wide mobile homes
- Modular homes
- Sectional homes
- Park model houses
In case you didn’t know, in the vast majority of situations, mobile home policies are going to cover only the house while it is stationary. It almost never covers loss or damage that was caused while the house is in transit.
So who should opt for it? If you can classify the space you live in as any of the abovementioned structures, then this policy might just be the right one for you. I would like to add that mobile home coverage may be available in the form of endorsement as well on a different policy, like HO-5 or HO-3.
If you’re not too sure if your house can qualify for any of these three homeowners’ insurance policies, then I suggest contacting your insurance agent just to see what is at your disposal when it comes to this.
And Last, But Not Least HO-8 Home Insurance Policy
For this one, I could say that it is perfect for older houses that were built over forty years ago. For these homes, the cost when it comes to rebuilding is usually very high, oftentimes, higher than the house’s market value.
Registered landmarks and historic properties normally have this policy. With it, your household and your belongings are covered for only these perils that I will mention below:
- Windstorm or hail
- Lighting or fire
- Civil commotion or riot
- Explosion
- Smoke
- Vehicles
- Aircraft
- Burglary
- Volcanic eruption
- Vandalism or malicious mischief
Coverage for liability, medical costs that were paid for others, and extra living costs are included in this policy too.
There are Also Riders And Other Coverage
Now, that I’ve told you everything concerning the homeowners’ insurance policies and everything that they include, I would like to remind you that you should also get yourself familiar with the various riders that are accessible to you and see whether you should take them into account or not.
So what are exactly riders? Namely, they offer additional coverage for certain events. You can perceive them as an add-on to your traditional homeowners’ insurance policy. Pipe coverage, flood insurance, sewer backup, and other structures coverage can all be defined as common riders. There are many others that I didn’t mention that can be available to you as well.
So How Can You Tell Which Policy Is Ideal For You?
That is something that I cannot tell you from this point of you, because, at the end of the day, you are the one who knows best what is most suitable for your house. However, in order to help you out, I will mention some factors below that will assist you in figuring this out:
- The type of structure you’ll be covering
- How old is the structure?
- Is it in a good or bad condition?
- The sorts of coverage you need or wish
- The requirements of your mortgage lender
I’ve been browsing the web lately to gather more information when it comes to this and what I found out is that a vast majority of homeowners opt for either HO-3 or HO-5 coverage because both of them cover a lot of perils.
On the other hand, if you’re a renter, then I think that it would be advisable to consider HO-4. In addition, if you have a co-op or condo, then the best solution for you will be HO-6, while the HO-7 is perfect for the ones who have mobile homes.
I know that there is so much information that needs to be “soaked up” when it comes to this, however, I do believe that after reading this informative guide, at least some things are going to be much clearer.
