Regardless of the size of your home, you need to protect it, hence the presence of different home insurance policies. However, the type of home determines the appropriate coverage that may meet your needs.
Whether you live in a condo, mobile home or permanent residence, buying home insurance is crucial to cover your home against unforeseen events like fires that can cause damage.
For a better understanding of insurance policies, you should know how the two general types of policy coverage work in the United States, namely:
- Open Peril: Refers to a form of property insurance that provides protection against almost all types of loss except those excluded in the policy.
- Named Peril: Refers to a form of property insurance providing coverage for losses explicitly listed in the policy.
With that in mind, below is a breakdown of the different types of home insurance policies:
Basic Form Coverage
Commonly known as the HO-1 policy, it only covers the structure of your home. The policy does not cover personal liability, property or living expenses.
Additionally, the policy coverage provides actual cash value, which means the insurance cannot fully fund the rebuilding of a home since it involves the value of the home minus its depreciation due to age. .
Basic form coverage is named peril, covering damage caused by vehicles or aircraft, fire, explosion, hail, lightning, civil disturbance or riot, theft, smoke, wind, volcanic activity or wind. Basic form coverage may be ideal in cases like the California fire that affected approximately 500 homes.
Broad form insurance
Also known as the HO-2 policy, it extends beyond the HO-1 policy to include insurance coverage for personal property and additional risks. The HO-2 policy is also a named peril which covers all perils of the HO-1 policy plus those caused by artificial electrical currents, falling objects, freezing plumbing, accidental discharge or steam overflow or water, or the weight of snow and ice.
However, it is crucial to note that general insurance also covers your belongings for their real cash value, i.e. their value after depreciation. You can contact companies like Youi to cover you if you need home insurance australia.
It is important to note, however, that the types of insurance can vary from country to country, so always make sure you know the types of cover for the country in which you need insurance.
Special home insurance
Also known as an HO-3 policy, this is the most common type of insurance. The HO-3 policy includes home structure, personal property, and liability coverage.
Therefore, the insurance company helps you to replace or repair your house structure along with all the additional property structures. It also covers your belongings, even those that are not in your home, as well as all costs of injury that may occur in your home, including injuries to guests and protection against legal action.
The HO-3 policy is an open risk policy although it has its limitations. Special insurance does not cover damage caused by floods, earthquakes, government seizures, negligence, mudslides, pets and insects, power outages, sinkholes or back-ups. sewer.
The HO-4 policy covers people living in rental homes and apartments. Renter’s insurance provides similar coverage in basic and broad forms. However, it does not cover damage to the rental unit.
The named perils which are covered in the HO policy are damage caused by a vehicle or aircraft, falling objects, explosions, fire, hail, freezing, civil disturbances or riots, lightning, theft, smoke, vandalism, water overflow, windstorms, water heater damage and the weight of ice or snow.
Multi-risk home insurance
Also known as HO-5, it generally provides the highest form of coverage for homes and personal property under all circumstances except those listed as exclusions.
This policy has similar exclusions as the HO-3 policy, but pays replacement costs instead of the actual cash value. It also includes coverage for visitors’ medical expenses, liabilities, and other living expenses.
HO-5 policy exclusions include corrosion, animal damage, flooding, earthquake, foundation damage, fungus, landslides, mudslides, government seizure, mold, ordinance maintenance, rot, nuclear hazard, smog and sinkhole.
Better known as condo insurance or HO-6 policy, it covers the structure of the condo, the personal property inside and the owner’s liability. This is a named risk insurance policy covering events such as vehicle or aircraft damage, explosion, fire, lightning, hail, civil disturbance or riot, theft , windstorms, smoke and vandalism.
Before purchasing condominium insurance, it is crucial to review your condominium insurance policy to avoid coverage gaps and avoid duplicate offers that may be present in association insurance.
Mobile home insurance
The HO-7 insurance policy has similar coverage to the HO-3 but applies to mobile homes rather than single-family homes. This is an open peril policy that covers the structure of trailers, mobile homes and recreational vehicles. However, this policy covers a mobile home that is stationary and not in transit, and personal effects coverage only applies to named perils like those in the HO-3 policy.
Modified coverage form
Also known as the HO-8 policy, it provides coverage for older homes, typically built over 40 years ago.
The costs of rebuilding these historically significant homes are usually higher than their market value.
HO-8 policy covers your home and belongings under named perils such as hail or storm, explosion, lightning or fire, civil unrest or riots, smoke, vehicle or aircraft damage, vandalism, theft or volcanic eruptions .
Being a homeowner comes with many expenses.
Whatever your unit, it is crucial to know the different insurance policies in order to choose the one that will be ideal to protect your property and your well-being.
The overview above can guide you through the most common home insurance policies.