But, it doesn't have to be because there are only a few types of policies that are actually for your home and learning how they work isn't hard.
In this post today, I will go over the differences between HO3 and HO6 homeowners insurance, how they work and how to choose between the two.
What's An HO3 & HO6 Insurance Policy
Before we can talk about the differences between an HO3 and an HO6 policy, we first must understand how each plan works individually.
What is An HO6 Homeowners Policy
An HO6 policy is just the technical name for Condo Insurance and is going to be for a condo owner.
This type of policy traditionally will only cover your personal property, personal liability, your walls, floors, and your ceilings when you live in a condo.
However, just like renters insurance, it doesn't cover the actual structure of the building nor will your homeowner's associations master insurance policy cover your personal items.
An HO6 policy is a named perils policy for both your personal items and your property, which means it will only cover your items if they are damaged by the set of specific perils listed in the policy.
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What is An HO3 Homeowners Policy
The most common type of homeowners insurance policy you can find will be the HO-3, also known as a Special Form policy.
Since it has a broad range of coverage and some of the most affordable premiums, it has become the most offered type of home insurance policy.
The HO-3 policy is actually a combination of an "open perils" policy and a "named perils" policy.
It's considered a combination because it will cover your Dwelling (the physical house, and attached structures) on an open perils basis and your personal property (your things) on a named peril basis only.
The HO3 policy also only pays out claims on an Actual Cash Value basis.
We will cover exactly what the different types of perils mean, as well as the kind of claims payout options a little further down in this post.
This policy will also cover Other structures, Personal Liability, and Medical payments to others.
Open Peril Policy
An open peril policy is a complicated way of saying that you are covered for any peril as long as it is NOT listed as being excluded in your policy.
If your policy lists exclusions for ice, lightning, and floods, as long as the damage caused to your property wasn't from ice, lighting, or floods, you would be covered.
Named Peril Policy
A Named Peril policy is only going to cover you for perils that are specifically named in your policy documents.
This means, if your homeowner's insurance policy lists "snow" as a type of covered peril, but not "hail," then hail damage would not be covered in a named peril policy.
Below is a list of named perils that limit your personal property coverage on an HO3 policy
Remember, when it comes to your personal property if it is damaged by anything other than the below items; it won't be covered by your home insurance policy:
HO3 vs HO6 Homeowners Policy
The largest difference between the two policies is going to be that an HO3 policy is specifically for a house and an HO6 policy was created for a condo.
And while the HO3 policy is a mixture of a named peril and open peril policy, HO6 policies tend to be fully named peril policies.
Of course an HO3 policy will also cover the actual structure of your home as well as other structures on the property.
An HO6 policy will not cover any of the building items outside of your condo and only usually covers everything up to the walls of your unit.
You also have the option (depending on the company) to get the Replacement cost value of your personal items with an HO6 policy.
The HO3 policy will usually only return you the Actual Cash Value of the items you have lost and covers your personal property on a named peril basis.
Here is what it looks like:
Dwelling Coverage (coverage for your physical house, inside and out)
No Coverage (only the interior walls)
Personal Property Coverage (coverage for your stuff)
Actual Cash Value
Replacement Cost Value
Should I Get An HO-3 OR HO-6 Policy?
You can only get an HO6 policy if you are moving into a condo so there really isn't much to decide when it comes to this.
If you buy a house, you are going to need an HO3 or HO5 policy and will not be able to purchase an HO6 policy on your home.
In General, Who's It For?
HO3 policies are available to all home types (it’s at the insurance company’s discretion whether to accept your application for insurance).
HO6 policies are going to be for a condo owner and it will cover your personal property and personal liability when you live in a condo.
Who Has The Best Home Or Condo Insurance Policy?
We have found the best home insurance to come from Hippo, you can check out our quick review below.
About Hippo Home Insurance
Hippo is the newest entrant into the home insurance world but is backed by TOPA Insurance company.
As of today TOPA has an A- (Excellent) rating with A. M. Best.
Hippo believes that great homeowners insurance should be affordable, smart, convenient, and fast.
Hippo wants to make sure that you are able to get a homeowners insurance policy that covers you for the most relevant things today.
A Free (Roost Water Leak Sensor) With Every Policy
With every policy Hippo offers a free Roost water leak sensor that has a value of $50.00. According to Roost, you can outsmart water with their smart water leak and freeze detector. The way it works is that you place it anywhere the potential for flooding or leaking exists and if it senses water it will send an alert to your smart phone.
Simply Insurance Thinks
Hippo has come out of the gates swinging at its competitors with on average 25% lower premiums. They also have a much faster application and approval process which doesn't require an agent to complete. Hippo is the best answer if you need fast quotes and fast coverage.
Want to learn more? Check out our full Hippo Insurance Review.
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There is no reason to go without home or condo insurance, in fact, over 70% of people don't even shop for their homeowners insurance. Now that you understand the differences between and HO3 and HO6 policy it's time to take action.
Remember, your policy should be unique to your specific situation and regardless of which policy type you choose, it needs to make sense for your home and personal property.
Click here to get some quick quotes the process started today.