Types of homeowners insurance

What Type of Homeowners Insurance Do You Need? | CAI-IL

 Homeowner’s insurance, also known as property insurance or home insurance, offers coverage for your private home. With homeowner’s insurance, if your home is damaged, destroyed or burglarized by a cause covered by the policy, the homeowner’s insurance will help you restore your home, replace your belongings and even at times can reconstruct the house. Homeowners insurance also protects the homeowner by providing liability coverage. In liability coverage, if a person is hurt while at your property or you are deemed responsible for the damage of the property through negligence, this insurance cover protects you. The compensation amount you obtain in a claim from the insurance company depends on your policy’s limits. It is always essential to protect your residential property through homeowners insurance. Before getting the cover, you must read opinion about home insurance; this will help select the best insurance companies to go for. Some of the different types of homeowners insurance policies are discussed below.

HO–1 policy
Of all the homeowner’s insurance policy types, HO–1 is the most basic. It offers coverage for features such as carpeting, appliances and also some structures attached to the house, such as garages. It excludes coverage from additional living expenses, liability or personal property. This limitation makes this insurance policy unpopular. The policy will only provide coverage for your home under particular circumstances such as;

  • Volcanic eruptions
  • Riots
  • damage from vehicles
  • aircrafts
  • lightning and fire
  • explosions, 
  • Theft, smoke
  • vandalism 
  • Hail and Windstorms

HO–2 policy
Also referred to as broad form, the HO–2 homeowners insurance policy offers coverage for your personal belongings and home. In certain circumstances, liability coverage can be included in HO–2 policies. To know what exactly is included in your HO–2 policy, contact your insurance carrier direct. Like the HO–1 policy, HO–2 policy is a named hazards policy covering homeowners’ items and homes using the same terms as the HO–1 policy. In short, the HO–2 policy covers everything covered by the HO-1 and in addition covers some more perils, including;

  • Accidental and sudden damage from electrical elements.
  • Overflow or accidental discharge of steam or water inside a home
  • Overheating of air conditioning systems and freezing of pipes
  • Tearing apart, cracking and burning of some systems in the households
  • Weight of snow, sleet or ice
  • A dropping objects 

HO-3 policy
This is the most common homeowner’s insurance policy. It covers the home, liability, personal property, medical payments and living expenses. This policy is the standard policy. It offers the homeowner coverage over open perils for home structures and protecting the structures from all calamities, except those exempted in the policies list. However, for personal possessions, this policy offers named perils coverage, which it lists.

Perils excluded under HO-3 include.

  • Pollution and corrosion
  • Foundation issues
  • Pet or animal damage
  • Government actions
  • Defective construction or maintenance
  • Intentional loss
  • Wear and tear
  • Theft and vandalism 
  • Flood
  • Intentional loss
  • War
  • Nuclear hazard
  • Earth movement
  • Wet rot, Mold fungus, 
  • Neglect
  • Ordinance or law 
  • Power failure
  • vermin, Birds, rodents, 
  • Rust, Smog, or corrosion
  • Animals owned by the homeowner
  • Mechanical breakdown

The HO-3 covers a homeowner’s property under named perils, and thus, the items are covered under the following conditions.

  • Explosions
  • Damage from vehicle or aircrafts
  • Damage due to electrical faults
  • Damage due to the weight of ice or snow
  • Lightning and fire
  • Windstorms and Hail
  • Riots
  • Pipes freezing
  • Theft
  • Smoke
  • Volcanic eruptions
  • Falling Objects
  • Vandalism
  • Damage by water heater
  • Water damage from HVAC overflow and plumbing

HO–4 policy
This is standard renter’s insurance. Basically, renter’s insurance offers protection against a homeowner’s personal property. It also provides liability coverage. Some HO-4 policies also incorporate some living expenses that could enable one to pay hotel bills and food if there was damage to your home and you temporarily relocated. Usually, renters aren’t owners of the house, and thus HO-4 policies don’t cover the building structure. The HO–4 policy typically covers.

  • Falling objects
  • Explosions 
  • Volcanic eruptions
  • Fire and lightning 
  • Pipes freezing
  • Vandalism
  • Smoke
  • Hail and windstorms
  • Riots
  • Theft
  • Damage from vehicles or aircraft
  • Damages due to electrical current
  • Damage due to ice, snow or weight
  • Water heater damage from HVAC overflow or plumbing
  • Water heater damage

In conclusion, it can be challenging for a new homeowner to know the different insurance policies and covers available. It is even more hard to differentiate what one policy covers from what another covers. This article has discussed the various homeowner’s insurance policies, thus enabling the reader to understand them better. It also makes the process easy for those who may be searching for the proper homeowner’s insurance for their home.