Types Of Home Insurance
If you are planning to buy home insurance or revising your policy thoroughly understanding your options by undertaking extensive research will help you go a long way. Buying home insurance is not a complex process. However you need to take all your requirements into account. All homeowner’s insurance policies cover property losses due to theft by reimbursing money equal to the worth of belongings to replace them. Various home insurance provide fire coverage to varying extends. Nowadays almost all the home insurance policies are required to cover 100 percent rebuilding costs. There are various types of home insurance policies some of which are mentioned below:
HO number designates homeowner categories of home insurance and stands for homeowner. Following is the list of what each number covers:
HO-1: HO-1 is the standard home insurance policy and provides cover for 11 specific types of damage (including vehicles, smoke, vandalism, fire or lightning, explosion, riot, aircraft, windstorm or hail, damage by glass/safety glass, theft, and volcanic eruption). HO-1 is not very popular nowadays because it provides limited cover.
HO-2: Even though HO-2 is more expensive than HO-1 is provides cover for losses from 17 specific sources. In addition to losses covered by HO-1 i.e
1. Vehicles
2. Smoke
3. Vandalism
4. fire or lightning
5. explosion
6. riot
7. aircraft
8. windstorm or hail
9. damage by glass/safety glass
10. theft, and volcanic eruption
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HO-3: HO-3 differs from HO-2 and HO-1 in that it covers all losses except those explicitly specified in the policy. Flood coverage is not included in HO-3. Your policy would provide for what is not covered by HO-1 and HO-2 and will vary from company to company. HO-3 provides more extensive cover despite being more costly than HO-1 and HO-2.
HO-4 and HO-6: HO-4 and HO-6 do not cover buildings. They cover property and most a certain component of liability insurance. HO-4 and HO-6 are most suitable for renters and condominium owners.
HO-5: HO-5 is the most extensive home insurance policy. Its cover is 15 percent more than HO-3 and provides additional features not available in other types of home insurance. HO-5 also coves buildings, codes upgrades and sewer backups. As you get all types of cover in one policy it is far cheaper than buying a less expensive policy and adding all the upgrades.
HO-8: HO-8 is designed for older homes and repays damage on actual cash value basis which means replacement cost less depreciation. Full substitute cost policies may not be available for some (very old) old houses.
Comprehensive Home Insurance: As evident from the name, this is the most extensive type of home insurance policy as it covers both the building and its contents for all risks except those explicitly excluded. Two types of insurance risks are not provided for in any home insurance policy. These are risks for which insurance could be bought (i.e. optional coverage) and those for which there is no coverage can be bought (i.e. uninsurable peril).
Basic/Named Perils: If you want to save money by bearing part of the financial risk of loses yourself, the named peril policy might be the right option for you since it covers risks explicitly stated in the home insurance policy.
Broad Insurance Policy: If comprehensive home insurance is beyond your budget and name peril appears to be too risky the right choice for you would be broad home insurance as it is fairly priced. This policy provides extensive cover for items such as buildings and risks named in the policy.
