When you ponder over the types of houses that require home insurance, it is no surprise that what comes to your mind is a large house in the centre of a city. However, it’s not just the big, enormous, lavish, and luxurious houses that need home insurance.
Home insurance can be for a variety of houses. The types of houses that need home insurance policies can include condo, apartment, suburb house, tiny home, mobile home, landmarks, historical homes, etc.
Home insurance is also important and needed for any property that you are about to rent or any apartment you may want to give out for rent.
There are around eight types or forms of homeowners insurance.
- When You Own a Home
- When You Are Choosing to Rent Your Home
- When You Own a Co-op or Condo
- When You Own a Mobile Home
When You Own a Home
1. HO1 – Limited Coverage Policy – Basic Form
The name suggests everything. The limited coverage policy is also known as named peril policy, which means that it only covers the danger and perils that are listed or highlighted in the HO1 policy. The list of the peril is very small and contains only ten perils that the insurance policy guards your house against.
- Thunder or Lightning
- Smoke or Fire
- Windstorm or Hail
- Any Hazard From Airplane
- Any Hazard From Vehicles
- Eruption Of Volcano
- Civil Commotion and Riots
This HO1 policy is also limited in terms of providing personal liability coverage, and personal property coverage. Moreover, the HO1 policy that covers personal items only covers the items that you list down when you purchase the policy.
2. HO2 – Basic Policy
The HO2 policy is a broader form of policy and is more common than the HO1. It covers the same aspects as the HO1 policy but also includes the following:
- Unplanned or accidental overflow of stream or water
- Accidental or sudden damage from generated electrical current
- Weight of snow, ice or sleet
- Accidental and sudden tearing, burning, cracking, or bulging of household systems and pipes
- Freezing of household systems for e.g. heating or AC
- Falling objects
This HO2 policy also covers your personal liability and not just your personal belongings. However, any danger or damage which is not in the list is not covered, just like the HO1 policy.
3. HO3 – Special Form
Special form policies, also known as HO3 policies are usually affordable and inexpensive. These policies are named open peril policies as they are comprehensive and cover everything except the following things that are stated in the policy as well:
- Earth Movement
- Smog, rust & corrosion
- Theft to a dwelling under construction
- Settling, shrinking, bulging, or expanding
- Intentional loss
- Water damage which is not accidental
- Mechanical breakdown
- Ordinance of law
- Birds, vermin, rodents, insects
- Nuclear hazard
- Collapse (some coverage may be provided in your policy)
- Power failure
- Mould, fungus, or wet rot (some coverage may be provided in your policy)
- Wear & tear, deterioration
- Smoke from agricultural smudging and industrial operations
- Discharge, dispersal, seepage of pollutants
- Vandalism or malicious mischief (only if vacant more than 60 days)
- Animals owned by insured
- Government action
The HO3 home insurance policies usually contain all six of the crucial and core coverage plans: loss of use, personal liability, medical payments, personal property, dwelling, other structures. However, the perils and damages covered vary from insurer to insurer so you will have to go over these things with your agent.
What the HO3 policies do not cover is mudslides, earthquakes, and floods.
4. HO5 – Most Comprehensive Policy
The HO5 policy is known as the comprehensive form policies. This is very detailed and expansive. However it is very costly as well and kind of on the similar lines as the HO3 policy. This policy gets more claims and personal property coverage and works on replacement cost value (RCV) basis, which pays to replace the property. HO3 policies are more centred towards dwelling, but HO5 policies cover both dwellings and personal property.
The HO5 policies are typically for homes that are newly built or constructed in a comparatively lower risk area because of its relatively higher value as compared to the rest of the state.
Contact your insurer to check if the price of HO3 policies differ from the price of HO5 policies and then take a decision. If the price of HO5 policies does not vary much from the price of HO3 policy,
then investing in the HO5 policy is a good option to go for.
5. HO8 – Older Homes Policy
For homes that are very old, go for HO8 home insurance policy. This policy is designed for houses that are aged 40 or plus.
The HO8 policy is a named peril plan that covers 10 dangers. Reimbursement is done based on the actual cash value of the properties. So instead of RCV i.e. the replacement cost value, the actual cash value of the property is important, meaning the depreciation has to be subtracted from the cost of replacement.
When You Are Choosing to Rent Your Home
6. HO4 – Renters Policy
This policy is able to protect your belongings in the house that you want to rent out. It can be an apartment and it can have items and possessions like fixtures and cabinets etc. You spend so much money on buying and installing these items that when you rent your home or apartment, you have to get protection against any damage to these items.
This type of insurance policy covers the 16 damages that the HO2 policy covers and is kind of similar to the HO3 policy too except for the dwelling coverage part because the tenants are naturally not
responsible for the structure of the building or apartment.
When You Own a Co-op or Condo
7. HO6 – Condo Policy
The HO6 policy is also known as condo insurance. Basically, it is a policy for those people who reside in a co-op or condominium. If your condo association’s master policy is robust, the protection level your condo policy will provide will be structured accordingly. By protection level, we mean coverage
The master policy will be able to reimburse the building’s common areas as well as the building’s
structure. However, it doesn’t cover the internal structure of the condominium or appliances that you installed, for example bathroom fixtures or cabinetry. If you want coverage on these things, you will have to purchase a separate dwelling coverage with loss of use, personal property, personal
liability, loss assessment coverage, and medical payments etc.
When You Own a Mobile Home
8. HO7 – Mobile Home Policy
Mobile home insurance is kind of similar to the HO3 policy. You will find that it is designed specifically for mobile homes. These kinds of homes are typically covered under HO7 policies that include but are not limited to the following:
- Travel trailers, trailers, fifth-wheel trailers
- Double-wide mobile homes and double-wide manufactured
- Single-wide mobile homes and single-wide manufactured
- Modular homes
- Sectional homes
- RVs and Park model homes
An important variable that determines your policy cost is the size of your house.
Choose the type of home insurance that matches your requirements makes the most sense for you!