Article 1 of 6 in How to Find the Right Type of Home Insurance
There are several basic types of home insurance that offer different levels of coverage. Each type of home insurance policy provides coverage for certain perils. A peril is the particular event that causes the damage or destruction of the home. Some types of home insurance policies will name the perils specifically, and others will exclude them. What you need out of home insurance depends on your home and what you want to cover. Read below to understand what is included across different types of home insurance coverage.
TIP: If you have any questions on a specific peril, or type of homeowners insurance coverage, then click here to consult an experienced professional.
Basic Types of Homeowners Insurance Coverage
HO-1 is very basic coverage. It only covers damage to the dwelling as a result of 10 listed perils, and does not include homeowners personal liability insurance. Therefore, if you're sued by someone who slips on your property, your insurance company won't defend you in court or pay the plaintiff if you are found to be at fault. If you have a mortgage, you would not buy this type of insurance as it would not provide you adequate protection to insure your home. The ten perils the HO-1 Home Insurance Policy will protect your home and belongings from are:
HO-2 is sometimes called the broad coverage policy. The HO-2 is similar to the HO-3 because it covers the dwelling (house) and other structures (detached garage, fence), but it insures against only specifically named perils. The policy includes more perils than HO-1 and offers homeowners personal liability coverage. The sixteen perils that your home and belongings are protected from with the HO-2 Home Insurance Policy are:
HO-3 policy is called the special form policy. It insures your home and detached structures against loss or damage from any peril except for those specifically excluded in the policy. This is the policy most homeowners purchase. It is important for you to read your policy carefully to see what is excludedâyou may want to cover exclusions with special home insurance riders. The contents of your home are only covered against listed perils, so be sure to read that list in your policy. This policy also includes liability coverage. If the damage to your home is not caused by something on the exclusion list, then you have coverage. Exclusion List for Your HO-3 policy:
HO-4 This is the only insurance policy designed for renters. It is however, part of the homeowner's policy group. It is known as the tenant homeowner's policy as well as the Contents Broad Form policy, and it covers only the contents of the home and personal liability for the insured tenant. The policy also covers additional living expenses if a renter is displaced due to a covered loss, medical payments to others, as well as the liability protection.
HO-5 is one of the best home insurance policies available in the United States. It provides excellent coverage for the dwelling itself and for the contents of your home. The HO-5 insurance policy is an open perils policy, which means it only lists the perils the policy does not cover. If your home and/or personal property are damaged by something that is not on the exclusion list, then you have insurance coverage. This policy provides the most extensive coverage that is offered. It is one of the most elite home insurance policies available to homeowners. Exclusion List for Your Home & Contents:
HO-6 covers a condominium owner who wishes to insure items not insured by the association policy, as well as the personal property inside the unit. This condo insurance focuses on contents and is similar to the HO-4 because the policy holder does not own the structure the unit is in. This policy includes liability insurance as well, which means you'll be covered if someone is injured in your unit and wants to sue. It also is a name peril policy and it covers against sixteen named perils. This protection covers both your dwelling and your personal property. The sixteen perils are:
HO-8 is the older home policy. Having an older home may preclude you from being able to buy a replacement policy; you may have to buy a modified replacement policy instead. Put simply, you need this insurance if the cost to rebuild your home far exceeds its current market value. Your home may currently be valued at $400,000, but costs $500,000 to rebuild if completely destroyed by fire. For example, if you live in a very old home built using methods unique to the period it was built, this policy would be your best option. Make sure you determine whether the policy is covering you at actual cash value or replacement cost. This is important! You can always endorse the policy to get replacement cost coverage. The HO-8 insurance policy is a named perils home insurance policy. The ten perils the HO-8 Home Insurance Policy will protect your home and belongings from are:
Important Perils That May Not Be Covered by Your Policy
Although all the policies vary in their coverage, it is common that they do not include protection from certain disasters. The most notable exceptions are:
If there is a peril that is not covered or the limits of your policy are too low, you can ask about adding a home insurance rider to your policy to make sure you get the appropriate coverage.
Buying the best homeowner's policy requires that you understand the different types of homeowner's policies above. Know your risk and discuss any risk with a reputable insurance agent that can guide you in making these decisions. To get a free, no-obligation quote on any of the types of homeowner's policies above, click here and start shopping today.