Types Of Home Insurance Policies

Cheap home insurance covers your home and its contents, providing coverage for losses arising from damages to the home arising from occurrences covered under the insurance policy. The Insurance Services Office provides a great amount of statistical information and other guidance for insurers, and has seven standardized types of home insurance policies that most insurers use to offer their clients coverage.

Coverage types

• HO-1 — This is the basic homeowners’ policy. This policy covers homes against 11 types of occurrences, such as damages arising from fire and lightning, hail or windstorm, vandalism, theft, vehicles or aircraft, explosions, civil unrest or riot, breaking glass, smoke, volcanic eruption and personal liability. These policies typically exclude floods and earthquakes from coverage. Riders can be purchased for additional coverage, or a more comprehensive policy may be appropriate if you desire additional coverage. HO-1 policies are less common than HO-2 policies.
• HO-2 — This as the broad form homeowners’ policy. This policy is more expansive than HO-1, and includes more perils (17 in all). The policy is also more specific about what types of events are covered. HO-2 policies also typically provide coverage for living expenses if your home is rendered uninhabitable. All occurrences not specifically covered by the policy are excluded from coverage.
• HO-3 — This is the special form homeowners’ policy. This is the most expansive form of homeowners’ insurance for single-family homes. These policies typically provide coverage for all events save those specifically excluded by the policy. The policy also provides extensive coverage for the contents of your home.
• HO-4 — This is renters’ insurance. Renters’ insurance provides coverage for the contents of a rental home or apartment. Policies are for either cash value or replacement costs of covered property.
• HO-5 — Premier homeowners’ policy. This covers provides even more coverage than the HO-3. It also covers contents coverage for all events except those specifically excluded by the policy.
• HO-6 — This form of coverage is for condominium owners. Typically, these policies provide coverage for the value of the condo, contents, loss of use and liability.
• HO-8 — This is coverage for older homes. Because older homes don’t comply with contemporary building and wiring codes, they provide a bigger risk for insurers. Also, replacement costs are likely to greatly exceed the property’s value on the market. As a result, specially written policies are needed to cover these homes.

Riders

In addition to the standard coverages provided by most insurance policies, there are options or “riders” which can be added to the policy. A “rider” is an additional set of terms and conditions that “rides on” the basic package offered by the insurance company. Below is a sampling of some of the most common riders that can be added to or purchased along with an insurance policy. Also, looking for a cheap house insurance is important.

Stats on coverage

According to a recent National Association of Insurance Commissioners report, 83 percent of homes are covered by owner-occupied home insurance policies. Eighty-seven percent of these homes use a form of HO-3 coverage, while 9 percent use the broader HO-5 coverage. Three percent use the HO-2 form of coverage.

Thirteen percent of all homes use renters’ or condominium insurance. The vast majority of these use the HO-4 form, which is typically referred to as renters’ insurance.

When purchasing insurance coverage, it’s important to consider how much coverage you need and the value of your home and its contents to purchase appropriate insurance. Be sure that you understand your policy, and everything it includes and excludes from coverage before committing to a policy.