Homeowners insurance policies come in several types, each offering varying levels of coverage suited to different property types and protection needs. The most common homeowners insurance policies, designated HO-1 through HO-8, vary in terms of what’s covered, the types of perils included, and the coverage limits.
Here’s a breakdown of each type:
1. HO-1: Basic Form
- Coverage: Provides the most limited coverage and only covers a few specific perils.
- Perils Covered: Typically includes only basic risks like fire, lightning, windstorms, hail, explosions, and theft. Sometimes it covers vandalism and civil commotion.
- Structure and Contents: Covers both the structure and personal belongings on a "named perils" basis (only the perils listed are covered).
- Availability: Rarely offered today due to its limited protection; it’s usually only chosen for certain situations where minimal coverage is acceptable.
2. HO-2: Broad Form
- Coverage: A step up from HO-1, HO-2 policies cover more perils.
- Perils Covered: Covers all perils in HO-1, plus additional ones like falling objects, the weight of ice or snow, water damage from burst pipes, electrical surge damage, and accidental damage from appliances.
- Structure and Contents: Provides “named perils” coverage for both the dwelling and personal property.
- Availability: More common than HO-1, but still less popular than HO-3 due to the limitations of named perils.
3. HO-3: Special Form
- Coverage: The most popular and widely used homeowners insurance policy, offering extensive coverage for most homeowners.
- Perils Covered: Covers the structure on an "open perils" basis (all risks are covered except those specifically excluded), and personal property on a "named perils" basis.
- Structure and Contents: Provides comprehensive coverage for the dwelling and named-perils coverage for personal belongings.
- Availability: Widely available and popular due to its balance of broad coverage and affordability.
4. HO-4: Tenant’s Form (Renter’s Insurance)
- Coverage: Designed for renters rather than homeowners.
- Perils Covered: Protects personal belongings on a "named perils" basis, typically including fire, theft, vandalism, and water damage from certain sources.
- Structure and Contents: Does not cover the dwelling itself, as the landlord’s insurance usually covers that; focuses on the tenant’s personal property and liability.
- Availability: Common and affordable, offering essential protection for renters.
5. HO-5: Comprehensive Form
- Coverage: The most extensive homeowners insurance policy, providing the highest level of protection.
- Perils Covered: Offers “open perils” coverage for both the dwelling and personal property, covering any risk not explicitly excluded.
- Structure and Contents: Comprehensive protection for both structure and belongings, with broader coverage for valuables.
- Availability: Typically more expensive but ideal for homeowners seeking maximum coverage and willing to pay a higher premium.
6. HO-6: Condo Unit Owners Form
- Coverage: Specifically designed for condo or co-op owners.
- Perils Covered: Covers the interior structure of the unit (often walls-in coverage) and personal property on a "named perils" basis. Typically includes liability and loss assessment coverage for shared property damage within the complex.
- Structure and Contents: Covers interior portions of the unit and personal belongings, while the condo association’s master policy covers exterior or shared parts of the building.
- Availability: Common for condo owners and often required by the condo association.
7. HO-7: Mobile Home Form
- Coverage: Tailored specifically for mobile or manufactured homes.
- Perils Covered: Similar to HO-3, offering open-perils coverage for the dwelling and named-perils coverage for personal property.
- Structure and Contents: Covers the mobile home structure and personal belongings, with protections similar to a standard home policy but adjusted for mobile homes.
- Availability: Limited to mobile home owners, often required by lenders or communities.
8. HO-8: Modified Coverage Form
- Coverage: Designed for older homes or properties that may not qualify for HO-3 due to the age, condition, or unique construction of the property.
- Perils Covered: Provides "named perils" coverage for the structure and personal property, usually covering basic perils like fire, theft, and windstorm. Coverage is typically for the home’s “functional replacement cost” rather than its full replacement cost.
- Structure and Contents: Adjusted to cover repairs that preserve the home's function rather than recreating original features or materials.
- Availability: Common for historic homes or properties where full replacement cost would be cost-prohibitive.
Summary of Coverage Types
Each type offers specific benefits tailored to different housing situations, so selecting the right policy depends on the type of residence, desired coverage level, and budget. The most commonly used policies, like HO-3 and HO-5, provide robust protection, while others, like HO-4 and HO-6, serve more specialized needs.
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Understand current or new Homeowners Insurance policy options, use the checklist to mark the coverage and consult an agent to get the right coverage. And, get the clarity on your Homeowners Insurance coverage and be ready with the allowed claims when it comes to such situations.
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Based on the location with various natural disasters and insurance company, the policy needs to be evaluated by working with an agent.
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Homeowners Insurance Index List of Homeowners insurance policy posts: Homeowners Insurance IndexStart here on Homeowners insurance journey. List of Homeowners insurance policy posts: 1. What’s NOT Covered On a Standard Homeowners Insurance Policy? 2. Understand Homeowners insurance life cycle 3. Understand Additional Types of Homeowners Insurance Policies 4. What
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