What You Need to Know about the Different Types of Home Insurance

The importance of purchasing a homeowners insurance policy becomes obvious when you consider the magnitude of the financial burden you would have to bear if a tragedy occurs. There are different plans available on the market which can offer partial to full coverage for specific situations. A basic understanding of the major types will help you find a perfect

fit for you.

Types of Homeowners Insurance

They are usually designated with the code HO-X, where X is their allocated number as in the list. They include:

  1. Basic Form – HO-1
  2. Broad Form – HO-2
  3. Special Form – HO-3
  4. Contents Broad Form – HO-4
  5. Comprehensive Form – HO-5
  6. Unit-owners form – HO-6
  7. Mobile Home Form – HO-7
  8. Modified Coverage Form – HO-8

What Are the Features of a Standard Homeowners Insurance Policy?

Here are a few features that characterize the various kinds of homeowners insurance available.

Coverage

This shows what part(s) of the home is covered in the policy, and the extent of coverage varies with the type. Common kinds of coverages to expect include:

  • Dwelling Coverage protects the home structure, including everything attached to the building; for example, HO-5 protects only single-family homes, and it is one of the most commonly used policies. On the other hand, HO-6 is for those who live in a condo or co-op.
  • Contents Coverage protects the belongings in your home; For example, HO-3 covers personal belongings like furniture and appliances.
  • Personal Liability covers for injuries to self or guests.

Named Peril

This refers to the list of casualties that are covered by the policy. They are specifically named in the agreement, and while some policies cover more than others, there are those that cover all. HO-1 covers ten events, including damage caused by:

  • Theft
  • Smoke
  • Vehicles
  • Fire/Lightning
  • Explosion
  • Volcanic Eruptions
  • Aircraft
  • Riot/Civil commotion
  • Windstorm/Hail
  • Vandalism and Mischief

Any damage caused by a factor that is not on the list will not be covered for this kind of policy. The special form (HO-3) usually lists perils that are not covered, which may include:

  • Neglect
  • Sinkhole
  • Act of War or Government Action
  • Nuclear Accident
  • Flood
  • Earthquake

Applicable Reimbursement

The terms of the policy agreement state the quality of the reimbursement, whether your home or belongings are covered at actual money value or replacement cost. Replacement cost is higher than actual cash value. It covers claims of damages at current prices. For example, while your personal belongings are covered at the actual value under an HO-3 policy, HO-5 policies cover them at replacement value.

Endorsements

The basic policies listed above will only cover specific structures and items as listed in the agreement. However, you may need to extend coverage to an ancillary structure, for example. You will need to add more coverage in the form of riders to cover specific events.

At Abatelli Insurance, we have a wide range of homeowners policies that will surely cater to your needs. Contact us today to learn more.

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