Your home is generally your biggest investment, and therefore, it’s important to ensure that it stays protected. That’s where homeowners insurance comes to play. But, how do you know what coverage is the right match for you and your family? Knowing the eight basic homeowners insurance policies can help guide you through this decision.
What is Homeowners Insurance?
Homeowners Insurance is an insurance policy that protects your home, finances, and belongings from unexpected repairs or replacements that are caused by unexpected events. Standard policies typically include coverages like:
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Dwelling Coverage: This coverage focuses on the physical structure of your home. It includes things such as floors, walls, built-in appliances, and attached structures.
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Other Structures Coverage: This coverage focuses on any structures that exist on your property that aren’t directly attached to your home. These include sheds, shops, and detached garages.
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Loss of Use Coverage: This coverage aids in covering living expenses should your home become uninhabitable due to a covered loss. This could include things like hotel fees.
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Personal Property Coverage: This coverage protects personal belongings that are kept inside your home. These can include furniture, clothing, and electronics.
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Personal Liability Coverage: This coverage protects you from paying out of pocket for any bodily injury or property damage that you are found liable for.
8 Different Types of Homeowners Insurance Policies
There are eight different main types of homeowners insurance policies. These are labeled HO-1 through HO-8. Let’s go over each of these different policies so you can get a better understanding of the policy that might suit your needs.
HO-1: Basic Form
HO-1 policies are rarely offered by insurers today due to their limited nature. The list of covered events is small, so this policy offers little coverage.
HO-2: Broad Form
HO-2 policies expand the list of covered events/perils from that of the HO-1 policy. In addition to things like fire, theft, and vandalism, HO-2 policies cover other events such as damage from snow or ice. Like an HO-1 policy, it only covers what is specifically listed in the policy. An HO-2 form can be a good option for some protection to your home and belongings at a lower premium.
HO-3: Special Form
The most common homeowners insurance policy would be the HO-3. Rather than only protecting your home from certain listed events, the HO-3 policy protects your home from everything except what is specifically excluded in the policy. As for your personal belongings, the HO-3 policy protect these only from listed events. An HO-3 is an excellent option to protect the main structure of your home from unexpected events while keeping premiums affordable.
HO-4: Contents Broad Form (Renters Insurance)
HO-4 policies are what we refer to as renters insurance. As the structure of the property is the landlord’s responsibility, renters insurance focuses on protecting your personal belonging on a named event basis, like HO-1 and HO-2 forms.
HO-5: Comprehensive Form
HO-5 policies work similar to an HO-3 form, only it offers additional protection by also having personal belongings included on an open-peril basis. This means that any cause of loss or damage is covered unless it is explicitly excluded from your policy. Coverage limits for highly valuable items, such as jewelry, often are often higher.
HO-6: Unit-Owners Form (Condo Insurance)
HO-6 policies are created for condo owners. Typically, these policies cover the interior or the unit as well as personal belongings and liability coverage. This type of policy works together with the condo association’s master policy to protect the entire building and common areas.
HO-7: Mobile Home Form
HO-7 policies are created for mobile and manufactured homes. Like HO-3 forms, they offer coverage for anything damaging the structure of the home except what is specifically excluded. For personal belongings, these must be specifically named in the policy to be protected by this policy.
HO-8: Modified Coverage Form
HO-8 policies are created for older and historic homes that might need replacement costs that exceed typical pricing and materials that are no longer widely available. These policies cover less than other more modern homeowners policies.
Knowing What’s Right for You
Now that you have a basic understanding of the 8 main types of homeowners insurance policies, you will have a better idea of which policy might fit your needs. That being said, it’s always worth talking to an agent, like our agents here at Insurance 4 Idaho. Our agents are here to offer personalized advice and tailor your policies to fit your needs and concerns.
