Whether you are purchasing your first home insurance policy or want to update your current coverage, knowing the basics of homeowners insurance is essential. Before making a decision, you’ll want to be familiar with the various type of home insurance available.
The Basic Home Insurance Policies
Just like other forms of property insurance, home insurance coverage has various sections and types of coverage. Home insurance policies can feature several standard components which include:
Dwelling Coverage
This is the basis for all recommended home insurance policies and provides protection for your home’s structure including the wall, floors, ceilings, built-in appliances and any attached structures. It ideally covers an array of perils which include hail, vandalism, fire, and theft. In case of a total loss, this coverage can also help you rebuilt your house, but up to the policy limit.
Personal Liability
This is a coverage that protects you against claims filed against you for property damage or injury if someone is injured while on your property.
Contents Coverage
This coverage protects items such as clothing and furniture in your property. If a covered incident were to happen, you will get compensated for the value of the items, as defined by your policy.
Additional Living Expenses
This is a coverage that covers the costs that you may incur if you have to temporarily move due to your house becoming unlivable because of covered damage.
The Different Types of Home Insurance Coverage
Basic Form (HO-1)
This is the standard, named-peril home insurance policy form and it’s the least expensive. However, it has the least amount to coverage, often covering fire or smoke, theft, lightning, explosions, windstorms and hail, vandalism, volcanic eruption, damage from cars, civil commotion and riots as well as damage from an aircraft.
This form of coverage largely covers dwelling protection, but with some insurance providers, you can add property coverage and or personal liability.
Broad Form (HO-2)
This is also a named-peril policy that covers all perils in HO-1, plus the following:
- Falling objects
- Accidental overflow of steam or water
- The weight of snow, sleet or ice
- Sudden or accidental damage to pipes and other household systems.
- Accidental damage from an electrical current
This type of coverage often covers dwelling protection, personal liability and personal belongings. However, HO-2 just covers the names perils mentioned in the policy.
Special Form (HO-3)
This is the most common form of home insurance because of its coverage and affordability. For starters, it covers all the perils covered in Broad Form and more. It’s ideally a named-peril policy and so, it covers you from any an all perils except those that are specifically excluded from your policy.
HO-3 coverage also covers your property, liability and personal belongings. The excluded perils include floods and earthquakes.
Tenant’s Form (HO-4)
This is a tenant’s policy for homeowners insurance. Under this form of coverage, your personal liability and personal belongings as a renter, are covered. The residence itself isn’t as it is covered by the owner’s home insurance. Sometimes additional living expenses can be added in this type of policy.
Comprehensive Form (HO-5)
This is a policy that you can tell from the name covers more perils than any other kind of homeowners insurance policy. It’s an open-peril policy for both liability and property and it covers all perils except those listed as exclusions. The perils excluded in the comprehensive form are floods and earthquakes or earth movements.
As already mentioned, it is the broadest type of home insurance and it’s more expensive than Special Form. However, it does give more comprehensive coverage.
Condo Form (HO-6)
This is the coverage you require if you own a condo. It protects your personal belongings and covers personal liability. It ideally covers the interior of your unit including the ceilings, floors and walls.
Mobile Home Form (HO-7)
This is a policy that’s meant for manufactured or mobile homes only. It covers the same perils as HO-3 or Special Form, but it’s ideally designed specifically for these kinds of houses.
Older Home Form (HO-8)
This is a kind of policy that specifically covers older homes. The age is defined by the insurance provider and provides the same coverage as Special Form, but with a few alterations that address differences that exist in older homes.
These are the common types of home insurance coverage, but they do not cover everything, as you may have noticed. As such, it is usually a good idea to customise your policy by including additional coverages in order to suit your specific needs and situation. Here are some of the optional add-on home insurance coverages that you may want to consider:
1. Flood Insurance– This protects your belongings and property from flood-related damages. It’s a separate policy and has its own deductible. So, if you reside in a region that’s prone to flooding, then you may want to consider flood insurance.
2. Earthquake Insurance– This protects your house from damages caused by an earthquake or earth movement. It ideally has its own deductible and should be something to consider if you live in a region prone to earthquakes.
Sewer Water Backup-This policy protects your house in the event of a drain or sewer backup.
3. Other Structures Insurance- This one covers property that’s not attached to your home including shed, gazebo or unattached garage. If you won any of these structures, then it’s advisable to insure them to avoid the huge expenses in case of damage or theft.
4. Replacement Cost Plus– This provides an extra layer of coverage that can cover the additional costs required to rebuild a house after experiencing a total loss. If you’ve owned your house for a long time and are concerned about depreciation, this kind of coverage may be a good idea.
5. Medical Payments Coverage– This is a policy that covers the medical costs that result from an accident on the client’s property. This policy is meant for instant medical attention of guests on a customer’s residence without determining fault.
So there you have it, the common types of home insurance coverage and the additional policies that you can take to ensure the ultimate protection.