The Three Most Common Types of Insurance

Many insurance policies offer coverage for different types of damage and accidents. Each family should have at minimum one of these three.

Different types of homeowner policies

The insurance for homeowners falls within one of six categories. HO-1 or HO-2 are the more common names. They cover only property against damage that is specifically listed. The extent of the coverage varies and neither policy covers personal property. An HO-2 form offers more coverage than an ordinary HO-1.

HO-3 protects against any type of damage. A select number of items within the structure are also protected by HO-3.

Only belongings are covered by HO-4 or HO-6. These policies are used by renters because the landlord or management company has coverage for the dwelling. Like HO-1, HO-2 and HO-3, HO-6 provides greater protection and is more costly than HO-4.

HO-5 is very similar to HO-3, in that it covers both personal and property. HO-5 does not cover a specific set of belongings. Although it is more expensive than the other options, it is well worth it.

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Different types of medical options

Another common type of insurance is medical. You or your employer can choose from a variety of types.

One of the most popular types is the Health Maintenance Organization (or HMO). This plan lets you choose from a wide range of providers and includes preventative care. To see a specialist, however, you will need to be referred by your primary physician. You will also need to pay a small copay at each appointment.

A network of doctors is also available through the Preferred Provider Organization (or PPO). You don’t have to select a primary care provider, unlike an HMO. Any doctor, including specialists, can be seen as long as they are in your network. You don’t need a referral to see a different doctor. Each visit, like all other plans, requires a copay.

EPOs, or Exclusive Provider Organizations, work in a similar way to HMOs and POs. These are less expensive and offer a wider network of providers. These plans do not have out-of-network coverage, as opposed to PPOs, which cover an out-of-network doctor visit up to a certain point.

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Point of Service Plan (or POS) is a mix between an HMO or PPO. POS requires a primary provider assignment. However, you can see outside-of-network doctors if your copay is higher.

Different auto coverage

Also, auto insurance is very popular. Some options might not be available depending on your loan terms or state requirements.

In the event of an accident being your fault, liability plans will cover the damage and medical expenses. This only covers damage to property and medical bills. This coverage is required by most states. This is also the cheapest option.

Collision coverage covers the cost of repairs to your vehicle in case of an accident. Even if your vehicle is older and has no lien, this type of insurance is worthwhile. Your plan will cover the car’s value in the event your vehicle is damaged or destroyed. For lienholders, this policy is mandatory.

Comprehensive coverage includes everything that is not related to an accident, such as if your vehicle gets stolen or you are hit by a deer. This is a requirement for most lienholders.

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Everyone should think about the uninsured motorist. Although most states require liability coverage, not all drivers keep their plans beyond the time they get their license and tags. You have to be protected in the event that someone else causes damage or doesn’t have a plan to cover repairs.