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Are there different
types of homeowner
insurance policies?
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Yes. A person
who owns his or
her home would
have a different
policy from
someone who
rents. Policies
also differ on
the amount of
insurance
coverage
provided.
The different
types of
homeowners
policies are
fairly standard
throughout the
country.
However,
individual
states and
companies may
offer policies
that are
slightly
different or go
by other names
such as
“standard” or
“deluxe”. The
one exception is
the state of
Texas, where
policies vary
somewhat from
policies in
other states.
The Texas
Insurance
Department (
http://www.tdi.state.tx.us
) has detailed
information on
its various
homeowners
policies.
The chart below
lists the
disasters
covered in each
of the following
types of
policies:
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Dwelling
&
personal
property |
Dwelling |
Personal
property |
Dwelling
&
personal
property |
|
Perils |
Basic
HO-1*+ |
Broad
HO-2* |
Special
HO-3* |
Special
HO-3 |
Renters
HO-4 |
Condo/
Co-op
HO-6 |
Modified
Coverage
HO-8 |
|
1. Fire
or
lightning |
x |
x |
x |
x |
x |
x |
x |
|
2.
Windstorm
or hail |
x |
x |
x |
x |
x |
x |
x |
|
3.
Explosion |
x |
x |
x |
x |
x |
x |
x |
|
4. Riot
or civil
commotion |
x |
x |
x |
x |
x |
x |
x |
|
5.
Damage
caused
by
aircraft |
x |
x |
x |
x |
x |
x |
x |
|
6.
Damage
caused
by
vehicles |
x |
x |
x |
x |
x |
x |
x |
|
7. Smoke |
x |
x |
x |
x |
x |
x |
x |
|
8.
Vandalism
or
malicious
mischief |
x |
x |
x |
x |
x |
x |
x |
|
9. Theft |
x |
x |
x |
x |
x |
x |
x |
|
10.
Volcanic
eruption |
x |
x |
x |
x |
x |
x |
x |
|
11.
Falling
object |
|
x |
x |
x |
x |
x |
|
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12.
Weight
of ice,
snow or
sleet |
|
x |
x |
x |
x |
x |
|
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13.
Accidental
discharge
or
overflow
of water
or steam
from
within a
plumbing,
heating,
air
conditioning,
or
automatic
fire-protective
sprinkler
system,
or from
a
household
appliance. |
|
x |
x |
x |
x |
x |
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14.
Sudden
and
accidental
tearing
apart,
cracking,
burning,
or
bulging
of a
steam or
hot
water
heating
system,
an air
conditioning
or
automatic
fire-protective
system. |
|
x |
x |
x |
x |
x |
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15. Freezing
of a
plumbing,
heating,
air
conditioning
or
automatic, fire-protective
sprinkler
system,
or of a
household
appliance. |
|
x |
x |
x |
x |
x |
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16.
Sudden
and
accidental
damage
from
artificially
generated
electrical
current
(does
not
include
loss to
a tube,
transistor
or
similar
electronic
component) |
|
x |
x |
x |
x |
x |
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All
perils
except
flood,
earthquake,
war,
nuclear
accident,
landslide,
mudslide,
sinkhole
and
others
specified
in your
policy.
Check
your
policy
for a
complete
list of
perils
excluded. |
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x |
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* HO-1,
HO-2 and
HO-3
refer to
standard
Homeowners
Policies.
+HO-1
has been
discontinued
in most
states. |
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If you own
your home
If you own the
home you live
in, you have
several policies
to choose from.
The most popular
policy is the
HO-3, which
provides the
broadest
coverage. Owners
of multi-family
homes generally
purchase an HO-3
with an
endorsement to
cover the risks
associated with
having renters
live in their
homes.
HO-1: Limited
coverage policy
This “bare
bones” policy
covers you
against the
first 10
disasters. It's
no longer
available in
most states.
HO-2: Basic
policy
A basic policy
provides
protection
against all 16
disasters. There
is a version of
HO-2 designed
for mobile
homes.
HO-3: The
most popular
policy
This “special”
policy protects
your home from
all perils
except those
specifically
excluded. (Click
on the link
below for a
sample HO-3
form; you will
need Acrobat
which you can
download, free
of charge, from
the Adobe Web
site:
http://www.adobe.com/products/acrobat/).
Download/View
File:
HO-3 Form
(160 K) |
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HO-8: Older
home
Designed for
older homes,
this policy
usually
reimburses you
for damage on an
actual cash
value basis
which means
replacement cost
less
depreciation.
Full replacement
cost policies
may not be
available for
some older
homes.
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If you rent
your home
HO4-Renter
Created
specifically for
those who rent
the home they
live in, this
policy protects
your possessions
and any parts of
the apartment
that you own,
such as new
kitchen cabinets
you install,
against all 16
disasters.
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If you own a
co-op or a condo
H0-6:
condo/co-op
A policy for
those who own a
condo or co-op,
it provides
coverage for
your belongings
and the
structural parts
of the building
that you own. It
protects you
against all 16
disasters.
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Your level of
coverage
Regardless of
whether you are
an owner or
renter, you have
the following
three options:
-
Actual cash
value.
This type of
policy pays
to replace
your home or
possessions
minus a
deduction
for
depreciation.
-
Replacement
cost.
The policy
pays the
cost of
rebuilding/repairing
your home or
replacing
your
possessions
without a
deduction
for
depreciation.
-
Guaranteed
or extended
replacement
cost.
This policy
offers the
highest
level of
protection.
A guaranteed
replacement
cost policy
pays
whatever it
costs to
rebuild your
home as it
was before
the fire or
other
disaster–even
if it
exceeds the
policy
limit. This
gives you
protection
against
sudden
increases in
construction
costs due to
a shortage
of building
materials
after a
widespread
disaster or
other
unexpected
situations.
It generally
won't cover
the cost of
upgrading
the house to
comply with
current
building
codes. You
can,
however, get
an
endorsement
(or an
addition to)
your policy
called
Ordinance or
Law to help
pay for
these
additional
costs. A
guaranteed
replacement
cost policy
may not be
available if
you own an
older home.
Some
insurance
companies
offer an
extended,
rather than
a guaranteed
replacement
cost policy.
An extended
policy pays
a certain
percentage
over the
limit to
rebuild your
home.
Generally,
it is 20 to
25 percent
more than
the limit of
the policy.
For example,
if you took
out a policy
for
$100,000,
you could
get up to an
extra
$20,000 or
$25,000 of
coverage.
Even though
a
guaranteed/extended
replacement
cost policy
may be a bit
more
expensive,
it offers
the best
financial
protection
against
disasters
for your
home. These
coverages,
however, may
not be
available in
all states
or from all
companies.
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Information
Institute, Inc.
- ALL RIGHTS
RESERVED -
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