Agent Offfers
Realty Times TV

A Breakdown of 8 Types of Homeowners Insurance Policies

Written by Posted On Wednesday, 18 September 2019 10:50
A Breakdown of 8 Types of Homeowners Insurance Policies A Breakdown of 8 Types of Homeowners Insurance Policies www.google.com

Check out these 8 different types of homeowners insurance policies so you know exactly what kind of coverage is best for you and your home.

You probably know that homeowners insurance is one of the most important expenses you have to bear. But how much do you know about the various types of homeowners insurance policies?

Not enough, we would guess. Most people don't.

For most people, buying a homeowners insurance policy is a perfunctory matter. Most mortgage lenders require one. You get one because you need one. Perhaps you think, "I'll investigate policies in more depth later."

Now is the time. We're here to tell you about several different homeowners insurance options that you have to choose from.

But first, a little review.

What Exactly Is Homeowners Coverage?

Quite simply, homeowners insurance is property insurance to cover losses and damages to a house and assets in the home or on the property. It also provides liability coverage against accidents in the home or on the property.

It's true that the most important thing most people ever use homeowners insurance for is peace of mind. But this is a big thing. How many of us could afford to replace our homes and everything in them if they were destroyed or severely damaged?

8 Types of Homeowners Insurance Policies

Are you financially savvy enough to have a thorough understanding of the different home insurance types and what each offers or involves? If not, keep reading.

1. HO-1 — The Most Basic Form

This is the type of homeowners coverage that sets a baseline for coverage. These are the "four protections":

  • Structure of the home
  • Coverage of personal belongings
  • Liability protection
  • Additional living expenses (ALE)

This type of policy covers what most of us would call the "basics" and the insurance industry calls the "10 Perils," which are these:

  1. Fire or lightning
  2. Windstorm or hail
  3. Explosion
  4. Riot or civil commotion
  5. Aircraft
  6. Vehicles (unless caused by the insured)
  7. Smoke
  8. Vandalism or malicious mischief
  9. Theft (limit of liability on HO1 is usually $1,000)
  10. Volcanic eruption

If you noticed that there are some obvious things missing from this list, you are right. The rest of the 16 perils are covered by other types of homeowners insurance.

2. HO-2 — A More Encompassing Form

Also known as the "perils policy," this type of homeowners coverage is more comprehensive than the H-01, in that it includes perils 11-16:

  • Falling objects
  • Weight of ice, snow, or sleet
  • Accidental discharge or overflow of water or steam
  • Sudden & accidental tearing apart, cracking, burning, or bulging
  • Freezing
  • Sudden & accidental damage from artificially generated electrical current

Because this is a "named perils" policy, any damage not caused by something specifically named on your policy is likely to be excluded.

3. HO-3 — The Hybrid Form

The most common of the homeowner's forms, this policy is considered a hybrid since it includes all 16 perils, but also has 21 "excluded perils"--many of which might seem obvious--for example, war and intentional loss.

However, it also excludes power failure and birds, vermin, rodents, and insects. Coverage for occurrences such as these often can be endorsed on a policy for an added premium.

4. HO-4 — The Renter’s Form

While technically not a home owner's policy since a renter doesn't own her/his home (the landlord does), this type of policy does protect the renter's belongings--in other words, what makes the place feel like home.

It is a valuable policy nonetheless since renters are not likely to have other coverage for valuable belongings. The policy also covers certain types of liability.

5. HO-5 — The Comprehensive Form

This policy covers just about everything. By this, we mean it is "an open-perils policy" listing only the perils your home and personal property insurance does not cover.

According to Investopedia's Reyna Gobel, "If you have fantastic credit and the difference in price is relatively small, HO5 policies give you no fuss, no muss insurance, because the burden of proof for any personal property claim lies with the insurance company."

6. HO-6 — The Condo Owner's Form

A condo policy is similar to homeowners coverage, except that it doesn't cover the exterior grounds or any shared buildings or facilities (e.g., a pool or clubhouse). These are paid by homeowners association fees.

Where all this can get tricky, though is in determining where a condo owner's covered property ends and that of "the community" begins. What if, for example, a roof leak damages both a condo ceiling and the owner's couch?

In cases like this, the insurance companies will need to negotiate a settlement--a rather common occurrence these days. For more discussion of these concerns, read this article.

7. HO-7 — The Manufactured Home Form

Also known as "mobile homes," mobile homes need much the same type of homeowners coverage as condos and traditional houses. However, you might need a more flexible policy to address areas of greater vulnerability for these homes.

For example, mobile homes are at greater risk of electrical fires than other types of homes. And, unlike more permanent structures, they require some level of collision insurance--which seems logical enough.

8. HO-8 — The "Creaky Old House" Form

Finally, we have to consider the special insurance circumstances of older homes. This is a very basic policy that only protects a home and its contents from the most basic and common perils.

Since most older homes would be extremely difficult to replace if destroyed, insurers generally won't issue policies that include full replacement value. 

Other Information: Homeowners Insurance Options

This was a fairly simple overview of the various types of homeowners insurance policies, but you can always read more about them before committing to a particular one.

We'd also like to remind you that relatively few actual homeowners policies conform strictly to the categories of coverage just discussed.  Homeowners insurance options tend to conform to the needs of the homeowners and their families.

There can always be endorsements for special circumstances, as well as itemized possessions that might be too valuable to fit into a general category of "belongings" or "personal property." This is why a policy can take up many pages.

Putting it all Together

When you consider the various types of homeowners insurance policies, you probably can see there aren't all that many types of policies. As we said, though, the variations come with the ways we choose to adopt those policies.

It will be interesting to watch what happens to homeowners insurance options with new building techniques, even new types of homes, becoming available.

We've seen how adjustments have had to be made to ensure mobile homes. But now, some people are living in high-end storage sheds. And some are living in tree houses too! What will we be calling "home" next?

In the meantime, though, the majority of us should focus our concerns on keeping our policies up to date so that we don't get caught off guard by unfortunate circumstances we easily could have foreseen--and insured--for.

For more information on a variety of different homeowners' issues, check out the blog.

Rate this item
(0 votes)
DarshMam

Latest from DarshMam

More in this category: > 10 Common Plumbing Issues And The Damage They Can Cause Amid Disruption, Real Estate Agents Can Preserve a Profession
back to top

Agent Resource

Before You List

Today's Headlines

Realty Times

From buying and selling advice for consumers to money-making tips for Agents, our content, updated daily, has made Realty Times® a must-read, and see, for anyone involved in Real Estate.

Links

Sections

Search

Joomla! Debug Console

Session

Profile Information

Memory Usage

Database Queries