Home Insurance

 Home Insurance

A home is likely the most expensive item you'll ever buy during your whole lifetime, and for many people, it may take a whole working lifetime to pay off. For that reason, its important that you get the right amount of home insurance to protect yourself against loss. There are seven standardized types of home insurance policies that you'll most frequently encounter when looking for insurance for your home. Here is a breakdown of each type.

HO1 – Basic Homeowner Insurance
This HO1 is a very basic insurance policy that shields the home's value against eleven different disasters including: fire, lightning, vandalism, wind, theft, vehicular damage, civil commotion, broken glass, smoke, personal liability, and volcanic eruption. While this policy does appear to be all inclusive, at least in that it covers some of the worst events, it does not cover earthquakes or floods. In some places like California, earthquakes or floods might be the number one danger a home faces.

HO2 Broad Form Homeowner Policy

The HO2 policy covers the 11 perils in the HO1 policies as well as another six other problems including: bodily liability, medical liability, legals cases, and other associated problems. Be sure to note that much like the HO2, this policy does not include earthquakes or floods.

HO3 Special Homeowner Policy
This is the most commonly sold insurance for homeowners. The HO3 is considered to be “all risk” in that it covers everything included in HO2 as well as earthquakes and flooding. All Risk insurance covers everything unless otherwise specified, so be prepared to do some reading when buying an “all risk” policy.

HO4 Renter's Insurance
Renter's Insurance is one of the easiest insurance policies to buy because so many insurance companies offer this simply policy. A renter's insurance policy covers the contents of a rented home or apartment against loss from any of the risks protected by HO3 policies. This “all risk” policy can also cover items kept in automobiles, or leased outside storage containers and buildings.

HO5 Premier Homeowners Policy
The HO5 is a very broad policy that essentially covers everything in an HO3 plus extras. Only items listed and excluded from the policy are not covered. This is one of the higher premium insurance policies for homeowners.

HO6 Condominium Policy
The HO6 covers risks specific to condo owners. This may include liability and other risks that are incurred as part of close living quarters.

HO8 Modified Coverage
The HO8 policy was designed for older homes that have grown in valuable over time to exceed their original purchase and replacement cost. For example, while a 1910 home may have cost just a few thousand dollars to build, replacing the same home today would be far more expensive, and require greater coverage. The HO8 policy is perfect for that need.

Within each of these specific policies are a number of other additional riders and choices that can be added on or removed by the policyholder. These additional riders allow for more accurate and personalized coverage, and will help fine-tune coverage to your specific needs.

Dwelling - Coverage A

A number of homeowners choose to insure their dwelling only. This greatly reduces your premiums since a dwelling can't very easily be stolen, nor does it provide any insurance for anything contained in the home. For those without expensive art or belongings, or people who wish to reduce their monthly premiums, dwelling only coverage is an excellent choice. Renters insurance does not usually include coverage A, since the renter does not own the property.

Other Structures – Coverage B

Other structures generally include detached buildings or garages that are on the same property or in close proximity to the main building. Usually, coverage A is available up to only 20% of the value of your dwelling coverage, so expensive garages, barns or other structures may not be fully insured with this coverage alone.

Personal Property – Coverage C
This is one of the few portions of a policy where the insured generally carry too much insurance. Personal property includes possessions contained within the house and is usually tabulated to be equal to 50% or more of the coverage A value. So, on a $250,000 home, as much as $125,000 in coverage C may be required, even if you have possessions totaling only a few thousand dollars.

Coverage D – Loss of Use
Coverage D is an extra rider that will cover living expenses should you be displaced from your home. Often overlooked due to the limited risk of this event, coverage D will pay for a reasonable rental home while your primary residence is damaged or under repair.