Types of homeowners insurance

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A house purchase is a major investment. It is essential to have homeowners insurance in order to protect your home. Your home and belongings are covered by basic insurance policies. You would need to pay out-of-pocket costs to repair or rebuild your house if you don’t have homeowners insurance.

Not all homeowners insurance policies are created equal. Laura Adams, personal finance and insurance expert, explains that there are many types of homeowners insurance available for different property types. These include single-family homes, condos and co-ops, mobile and older homes, and even mobile homes. You can choose the type of coverage you need, depending on which home you have.

HO-1

The simplest type of homeowners insurance policy, an HO-1 policy, is the most basic. This policy covers only the structure of your house, any attached structures such as garages, appliances, and features inside your home like carpeting. It does not cover personal property, liability, or additional living expenses. It is not an option for homeowners insurance due to these limitations.

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HO-1 insurance covers your home only in certain situations. These include:

  • Vehicles and aircraft damage
  • Explosions
  • Lightning and fire
  • Hail and windstorms
  • Riots
  • Smoke
  • Theft
  • Vandalism
  • Volcanic eruption

HO-2

An HO-2 policy, also known as a broad type, covers your home and personal belongings. Insurance companies will cover personal belongings regardless of where they are located, whether they’re in your home, car or elsewhere. In certain circumstances, HO-2 policies might include liability coverage. Contact your insurance company to determine if your policy covers liability.

The HO-2 policy is similar to an HO-1, but it covers your home and personal belongings in the same way as an HO-1. This policy type includes all the same coverages as the HO-1, but adds a few extra perils.

  • Overflow or accidental discharge of water or steam in the home
  • Some household systems can be torn apart, burned, or cracked.
  • Freezing pipes, heating, and air conditioning systems
  • Certain electrical currents can cause accidental and sudden damage.
  • A falling object
  • Weight of sleet, snow, or ice
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HO-3

The most popular type of homeowners insurance is the “HO-3 Special Form” policy. This policy covers your home, personal property, liability, additional living costs, and medical payments.

Adams states that a HO-3 policy is the standard coverage. You get ‘open perils coverage’ for your home structure. This protects you against all natural disasters, unless otherwise stated in the policy. You also get ‘named perils coverage’ for personal property, which covers any disasters listed in the policy.

These perils are typically excluded from your home and other structures:

  • Construction or maintenance defects
  • Foundation issues
  • Actions taken by the government
  • Animal or pet damage
  • Pollution and corrosion
  • Vandalism, theft and frozen pipes in vacant homes
  • Wear and tear
  • Flood
  • Earth movement
  • War
  • Nuclear hazard
  • Intentional loss
  • Neglect
  • Mold, fungus, wet rot
  • Power failure
  • Ordinance or law
  • Mechanical breakdown
  • Smog, rust or corrosion
  • Vermint, birds, rodents
  • All animals owned by the insured

Your personal property is usually covered under named perils.

  • Vehicles and aircrafts are more likely to be damaged than the aircrafts.
  • Snow and ice can cause damage
  • Electric current can cause damage
  • Explosions
  • Falling objects
  • Lightning and fire
  • Hail and windstorms
  • Pipes freeze
  • Riots
  • Smoke
  • Theft
  • Vandalism
  • Volcanic eruptions
  • Falling objects
  • Water damage due to plumbing or HVAC overflow
  • Water heater damage
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HO-4

Standard renters insurance can also be called HO-4 insurance. Renters insurance covers your personal property and provides liability coverage. Additional living expenses are included in some policies. This could be helpful if your home is damaged or you have to temporarily move out. Renters don’t own their homes so HO-4 policies don’t provide coverage for the structure of the building.

The following are the types of events that renters insurance policies cover:

  • Vehicles and aircrafts are more likely to be damaged than the aircrafts.
  • Snow and ice can cause damage
  • Electric current can cause damage
  • Volcanic eruptions
  • Explosions
  • Falling objects
  • Lightning and fire
  • Hail and windstorms
  • Pipes freeze
  • Riots
  • Smoke
  • Theft
  • Vandalism
  • Water damage due to plumbing or HVAC overflow
  • Water heater damage

HO-5

An HO-5 policy is the best option for home insurance. This home insurance policy covers your home and personal belongings as well as liability. It also covers medical payments for other people. You can also get higher limits on jewelry.

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Adams recommends HO-5 homeowners insurance for those with high-value possessions. Adams says that although it may be more expensive and not offered by all insurers, it could be worthwhile if you have valuable possessions.

An HO-5 policy covers your home as well as your personal belongings. This policy is open perils, meaning that you are covered against any exclusions. Common exclusions are:

  • Earth movement
  • Acts or laws of the government
  • Infestation by birds, rodents, or insects
  • Intentional loss
  • Mechanical breakdown
  • Mold
  • Nuclear hazard
  • Pets
  • Vandalism is possible if the property remains vacant for more than two consecutive months
  • War
  • Floods and sewer backup can cause water damage.

An HO-5 policy covers more situations than a named peril basis. It can also make it easier to file a claim as you don’t have to prove that a covered cause caused the damage.

HO-6

HO-6 insurance is only for condo-owners. It covers your entire unit as well as personal liability, and any additional living expenses. Some condo policies include some dwelling coverage. This is because condo owners are responsible to the interior walls of their units. Condo residents do not own the entire building. The condo association has its own insurance policy which covers common areas, grounds, and exterior parts. The association’s insurance is paid for by condo owners or HOA dues.

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Named perils policies, HO-6 policies, generally provide coverage for:

  • Vehicles and aircraft damage
  • Snow and ice can cause damage
  • Electric current can cause damage
  • Explosions
  • Falling objects
  • Lightning and fire
  • Hail and windstorms
  • Pipes freeze
  • Riots
  • Smoke
  • Theft
  • Vandalism
  • Volcanic eruptions
  • Falling objects
  • Water damage due to plumbing or HVAC overflow
  • Water heater damage

HO-7

An HO-7 policy covers manufactured or mobile homes. This includes trailers, sectional houses, RVs, modular homes and RVs. This policy covers your home’s structure and personal items, as well as liability and additional living expenses.

An open perils policy covers the exterior of your house. This policy is in addition to your policy.

However, HO-7 policies will cover personal property under a named perils policy. This means that your personal belongings are not covered by a policy.

  • Vehicles and aircrafts are more likely to be damaged than the aircrafts.
  • Explosions
  • Explosions
  • Lightning and fire
  • Hail and windstorms
  • Riots
  • Smoke
  • Theft
  • Vandalism

HO-8

The HO-8 policy is the last type of homeowners insurance. This policy is for homeowners with older homes and homes that are difficult to replace. This covers historic homes, architecturally significant homes, and homes that were built using materials and techniques that are rare today. An HO-8 policy might be an option if your home is more damaged than it is worth.

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The standard coverage of HO-8 policies includes dwelling, personal property and liability. Additional living expenses are also covered. Medical payments are included in HO-8 policies. Named perils policies cover both your home’s structure as well as your personal property. This policy covers events such as:

  • Vehicles or aircraft damage
  • Explosions
  • Explosions
  • Lightning and fire
  • Hail and windstorms
  • Riots
  • Smoke
  • Theft
  • Vandalism

Questions frequently asked

Which is the best home insurance policy?

Renters insurance is the cheapest form of home insurance. It can cost less than 20 per month. Traditional homeowners insurance is usually more expensive. The amount that you pay for home insurance can vary, even if this is the case. Your location, age, home value, credit score, and where you live can all affect your home insurance rate. You can still search for the best home insurance provider to suit your needs.

What should I pay for homeowners insurance?

The cost of homeowner’s insurance varies greatly from one person to the next. The average annual cost of homeowner’s insurance in the United States is $13,312. Do your research and get multiple quotes to get an idea of the cost of homeowners insurance in your local area.

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What are the different types of home insurance?

There are eight types home insurance. They can be classified as HO-1 to HO-8. Each category covers a different type home and has its own coverages.

Are all the homeowners policies covered?

Each type of homeowners insurance has its own limitations and is tailored to a specific homeowner. Adams says that no matter what type of homeowners insurance you have, the peril must not be sudden and accidental. It won’t cover damage that you caused through negligence.