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8 Primary Types Of Homeowners Insurance In 2019 // Explained In Detail

Jun 06, 2019 (0) comment

types of homeowners insurance

When you are trying to secure your families financial future, figuring out the type of ​homeowners insurance policy you need is essential.

​And here's the thing:

​There are multiple types of ​home insurance​ and understanding how each one works can help you get the best amount of coverage for the lowest rates.

types of homeowners insurance

In this post today I will go over all of the different types of homeowners insurance, how they work, what they cover, and which option works best for each type of home.

The different types of home insurance plans include:



​Types Of Homeowners Insurance Plans 


​Policy


​Who Is It For


​Sub-Policies


​What's Covered?


HO-1-Basic Form


Homeowners


Hazard


Damage to the structure of your home caused by 10 named perils 


HO-2-​Broad Form


Homeowners


Hazard + Personal Property


Damage to the structure of your home and personal property caused by 16 named perils


HO-3-​Special Form


Homeowners


Hazard + Personal Property + Liability + ALE


Damage to the structure of your home and personal property caused by open perils, lawsuits filed against you, and the costs of temporary relocation


HO-4-​Tenant's Form


Renters


Personal Property + Liability + ALE


Damage to the structure of your home and personal property caused by open perils, lawsuits filed against you, and the costs of temporary relocation


HO-5-​Comprehensive Form


Homeowners


Hazard + Personal Property + Liability + ALE


Damage to the structure of your home and personal property caused by open perils, protection against liability lawsuits, and the costs of of temporary relocation


HO-​6-​Condo Form


Condo/Co-Op owners


Hazard + Personal Property + Liability + ALE


Damage to certain parts of your of your home and personal property caused by 16 named perils, lawsuits filed against you, and the costs of temporary relocation


HO-7-Mobile Home Form


Mobile Home Owners


Hazard + Personal Property + Liability + ALE


​Damage to the structure of your mobile home and personal property caused by 16 named perils, lawsuits filed against you, and the costs of temporary relocation


HO-8-​Older Home Form


​Owners of old or historic/landmark homes


Hazard + Personal Property + Liability + ALE


​Damage to the structure of your home and personal property caused by 16 named perils, lawsuits filed against you, and the costs of temporary relocation

H01: Basic Form

Your basic form home insurance policy is super simple, it will only cover what is outlined in your policy.

These types of policies are known as "named peril" policies which simply mean that if the type of peril isn't named, it isn't covered.

Unfortunately this policy only covers 10 perils which are:

  • ​Theft
  • ​Lightning
  • ​Vandalism
  • ​Explosions
  • ​Fire or smoke
  • ​Volcanic eruption
  • ​Hail and windstorms
  • ​Damage from aircraft
  • ​Damage from vehicles
  • ​Riots and civil commotion

​While this may seem like a reasonable amount of things to cover, the policy is much more limited in the fact that it also doesn't cover personal property or personal liability coverage.

Luckily for us, most states and insurance companies don't offer this type of policy anymore.

​Companies were finding that the monthly premiums for a more comprehensive polic​y was ​too close ​to the price of an HO1 basic form policy.

​​H02: Broad Form

Think of the broad form policy as an upgrade to the basic form policy, it will cover all the perils in your HO-1 policy and: 

  • ​Falling objects
  • ​Weight of ice, snow, or sleet
  • ​Freezing of household systems like AC or heating
  • ​Accidental discharge or overflow of water or stream
  • ​Sudden and accidental damage from an artificially generated electrical current
  • ​Sudden and accidental tearing apart, cracking, burning, or bulging of pipes and other household systems

Just like the HO-1 ​basic form policy, the HO-2 policy is a "named perils" policy, and any ​loss ​​caused by an event not listed in the policy won't be covered. 

​The broad form policy will usually cover the structure and your personal property.

While a broad form policy gives you more coverage than a basic form policy it still limits you on things covered.

​​HO3: Special Form

You will find the HO-3 or the special form policy to be the most common type of homeowners insurance.

It is most used because it has large range of coverage and some of the most affordable premiums.

It covers all of the perils mentioned in the HO-1 and HO-2 policies and then goes even further. 

The HO-3 policy​ is actually known as an "open perils" policy because as long as a peril isn't excluded it is covered.

​The special form policy will usually cover your home and attached structures, your personal property and personal liability.

​Keep in mind; however, this policy will not cover earthquakes or floods, you would need a separate policy for that.

Common exclusions you should expect to see in an open peril policy are:

  • ​War
  • ​Neglect
  • ​Collapse
  • ​Power failure
  • ​Water damage
  • ​Nuclear hazard
  • ​Intentional loss
  • ​Earth Movement
  • ​Ordinance of law
  • ​Government action
  • ​Mechanical breakdown
  • ​Smog, rust & corrosion
  • ​Mold, fungus, or wet rot 
  • ​Wear & tear, deterioration
  • ​Birds, vermin, rodents, insects
  • ​Vandalism or malicious mischief ​
  • ​Smoke from agricultural smudging
  • ​Theft to a dwelling under construction
  • ​Settling, shrinking, bulging, or expanding
  • ​Discharge, dispersal, seepage of pollutants

HO3 policies usually include the main core coverage which include: ​

Dwelling, Other structures, Personal property Loss of use, Personal liability, and Medical payments to others

​You need to look at your specific policy to confirm what coverage is included because they will differ in benefits.

HO-3 versus HOB

​While searching for homeowners insurance ​online, you ​might have come across something called an HOB policy.

These policies are almost identical to the HO-3.

However, an HOB form typically provides more coverage against water damage for coastal areas of the U.S.

A HOB policy ​could also cover things like garden tractors, boat and boat trailers, lawn mowers, and other similar accessories while they're on your property.

​Simply Insurance is the ​simplest & fastest way to compare ​home insurance online.

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​​H04: Tenant's Form

​The HO-4 policy is going to be the easiest to remember because it is ​actually renters insurance​.

​This policy was created to protect a renters personal property and their personal liability and some of them will cover loss of use.

Loss of use is if you are unable to stay in your rental because it is uninhabitable, the insurance company will pay for your lodging and food.

​Your belongings are covered by the same perils in an HO-2 broad form homeowners insurance policy.

This policy type is specifically for renters, since it covers only belongings and personal liability — not the building structure, which should be covered by the landlord's insurance.

Belongings are typically covered against the same perils as an HO-2 broad form homeowners insurance policy.

​​H05: Comprehensive Form

A comprehensive form policy is going to be the most expensive of all the home insurance policies.

However, it will also have the most coverage options available.

It will cover moer perils than other policies and is also an "open peril" policy. 

​Although they are similar to an H03 policy they have a few main differences:

​Replacement Cost Value

An HO5 policy will reimburse your dwelling and personal property on a replacement cost value.

This means that the policy will cover what it would cost to actually replace the policy, not the current value of the policy.

​Total Open Peril

​HO3 policies are open peril for dwelling only​ and named peril for personal property.

HO5 policies are open peril for both dwelling and personal property.

Expanded Limits

HO5 policies have ​increased limits for losses and damages to ​items like jewelry, fine furs, and electronics.

HO5 policies are ​usually for newer homes in a ​low-risk area with high value relative to the rest of the state. 

​​H0​6: Condo Form

​This policy is going to be for a condo owner and it will cover your personal property and personal liability when you live in a condo.

It will protect the walls, floors and ceilings of your condo as well.

However, just like renters insurance, it doesn't cover the actual structure of the unit ​nor will your homeowner's associations master policy cover your personal items.

If you own a condo you should ​get some condo insurance quotes and get covered.

​​HO7: Mobile Home Form

​When it comes to Mobile homes and recreational vehicles you are going to need the mobile home form policy.

It is basically the same as an HO-3 Policy, but it is designed specifically for mobile or manufactured homes. 

Some of the type of mobile homes covered under HO-7 policies include​:

  • ​Modular homes
  • ​Sectional homes
  • ​Park model homes and RVs
  • ​Trailers, travel trailers, fifth-wheel trailers
  • ​Single-wide manufactured and single-wide mobile homes
  • ​Double-wide manufactured and double-wide mobile homes

​​H08: Older Home Form

An HO-8 policy is ​created for coverage for older homes. 

​The older home form policy is basically the same as the HO-3 policy but with a few adaptations for older homes. 

​This coverage can be found on historic homes and registered landmarks. 

​Usually it is for coverage for homes that are: 

  • ​Over 40 years old
  • ​Don’t meet all of the structural and cosmetic update requirements

If you ​have an older home, you’ll typically need to make updates to the: 

  • HVAC
  • electrical
  • plumbing
  • and roof in order to qualify for an HO3 policy.

The HO-8 plan is also a named peril plan and only pays out on an Actual Cash Value (ACV) basis - replacement cost minus depreciation. 

​Taking Action

Hopefully you can see that homeowners insurance is for your house, apartment, condo, mobile home, tiny home (yes it's a thing), historical homes and landmarks.

It's even for the apartment you’re renting and even property you’re renting to someone else.

​Now that you understand the different types of homeowners insurance it's time to get covered.

Click here or the link above to get a quick quote and get covered.


Sa El is the Co-Founder & CEO of Simply Insurance. He is a Licensed Life and Health Insurance Agent with over 11 years of experience in the industry. He is an Entrepreneur, Insurance Educator and Field Underwriter. Sa is on a Journey to get 1 Million Families insured.

All posts by Mark Mathon

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