Approximately once every ten years, a homeowner files a claim with their homeowners insurance provider. Doing so makes taking care of major repairs easier and puts less strain on their budget.
Without coverage, the full cost of repairs has to be paid out-of-pocket. Imagine paying for a new roof without a little help! That's thousands of dollars that you could use on a vacation, paying down credit cards, and even adding to your investment portfolio!
Having a great insurance policy in place is the best way to protect your house. But how do you know which policy is right for your property?
Meeting with an insurance agent is a great way to spare yourself the worry and frustration of choosing the wrong coverage. But it's still best if you have an idea of the types of policies currently available.
In this guide, we'll take a look at the eight most common types of homeowners insurance so you can find the best policy for your needs.
HO-1 homeowners insurance is the most basic type of coverage on the market.
It's designed to protect you from damage caused by fire, hail, vandalism, theft, and other common threats.
Most HO-1 policies also protect against volcanic eruptions, civil unrest, lightning, and even windstorms.
For most homeowners, especially those looking for the most affordable coverage, these types of insurance policies are a great place to start. Keep in mind that these policies do not protect you from liability if someone is injured on your property.
You may need to purchase supplemental coverage if you decide to go with an HO-1 policy.
HO-2 insurance covers more events than the HO-1 policy. In addition to damage from fire, severe weather, and other such perils, HO-2 insurance provides protection from damage resulting from frozen pipes, water heaters, power surges, and steam from appliances.
This coverage is considered more comprehensive, but the insurance only kicks in if the damage is due to one of the events named in your policy.
HO-3 coverage is the most common and most widely recommended homeowners insurance policy. The policy covers both the main structure as well as outlying buildings on the property.
If you have items in a storage unit, these policies will also protect those items as well.
You'll be covered for all types of damage except those that are specifically not covered in your policy like floods and earthquakes.
In addition, the policies provide liability protection. If anyone is injured on your property or you accidentally do damage to your neighbor's property, the policy will help cover the cost of repairs.
HO-4 insurance is similar to a homeowners policy, but it's geared towards renters instead of homeowners.
Since renters don't own the property, the insurance only covers their belongings rather than the structure itself. However, if the tenant ends up damaging the property while living in it, the insurance will help cover the cost of repairs.
Renters' policies also provide liability protection. If a friend, guest, or repair technician is injured on your property, the insurance will help cover the cost of their medical treatment.
Additionally, you'll be protected from liability suits should the person try to take you to court for damages.
Think of HO-5 policies as the most comprehensive homeowners insurance out there. It covers the same perils as HO-3 insurance but also protects your belongings from damage due to an event that's not specifically excluded from your policy.
These policies often cost more in monthly premiums. But the higher premium means more extensive coverage.
The more risks you're protected from, the lower your out-of-pocket expenses will be if something unexpected happens.
As with all types of homeowners insurance, these policies will not cover every possible event. Make sure to discuss the details of the policy with your insurance agent before you agree to the terms of the policy.
HO-6 policies provide insurance for condo-owners. These policies work in the same way as standard homeowners insurance with a few differences.
Rather than protecting the entire condo building, the policy only covers the owner's unit.
If anything happens to the items inside the condo, the furnishings, or the structure of the unit, insurance will cover the cost of repairs.
Should anything happen to the exterior of the building, the damage is the responsibility of the condo's management team.
HO-7 insurance is designed to protect homeowners living in mobile homes.
The policy offers the same types of protection as HO-3 coverage and can include liability protection as well.
These policies are only available to individuals in mobile or manufactured homes and cannot be applied to RVs, even if they're permanently parked.
Unfortunately, some homes may not qualify for an HO-3 insurance policy. In most instances, these homes are more than 40 years old and have different repair needs than more modern houses.
HO-8 insurance is designed to protect those older homes.
Since older homes often have different requirements for replacement items, insurance companies value them differently.
Repairs can be more expensive than the actual value of the home. This means the insurance policy must be specially designed to cover that price discrepancy.
If you file a claim with an HO-8 policy in place, the amount the homeowner receives is typically based on the actual cash value of the damaged item minus depreciation.
What if these types of homeowners insurance aren't enough?
These types of homeowners insurance policies are only the standard ones available. They won't protect you from every possible event.
The only way to cover your home from damage due to perils not named in your umbrella policy is to purchase supplemental insurance coverage.
Contact us today to speak with one of our experienced agents. We'll help you find the best policy for your needs, whether you're looking for an umbrella policy or want to cover a particular threat to your home.