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 policies.
Understanding how each one works can help you get the best amount of coverage for the lowest rates.
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
HO1: 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:
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 policy was too close to the price of an HO1 basic form policy.
HO2: 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:
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:
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.
HO4: 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.
HO5: Comprehensive Form
IN THIS ARTICLE
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 more perils than other policies and is also an "open peril" policy.
Although they are similar to an HO3 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 item, not the current value of the item.
If you purchase a laptop for $2,000 and after 5 years it is destroyed by a covered loss.
It's current value is definitely not going to be $2,000; however, the insurance policy is going to pay out what it would cost to totally replace the same item, not its current value.
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.
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.
HO6: 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:
HO8: 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:
If you have an older home, you’ll typically need to make updates to the:
- 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.
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.