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The 7 Different Types of Homeowners Insurance Explained
For the overwhelming majority of Americans, the largest investment opportunity they will ever have is the chance to buy a home. This is why it is so incredibly important, especially in a time of economic insecurity, to protect your investment at every turn.
Of course, home upkeep is a big part of that, but you also need to be ready to protect your home and property from the inevitable. There are an incredible number of risks involved when you own a home, and that is why it is irresponsible, and possibly dangerous, to not have your property covered by home insurance. Luckily, there are any number of options, both in price and coverage, when it comes to protecting you largest investment.
Basic coverage, or HO-1 insurance covers the bare bones of what is needed to protect every home. HO-1 insurance is there to protect your home from ten basic things that might cause damage. This insurance will not cover people in your home for injuries received. Most of the examples on this list would qualify as common, like fire or lightning damage, wind storms, smoke damage, and theft.
HO-2 insurance covers a broader spectrum of possible damages and loss. HO-2 also covers the other structures on your property, like a fence or garage, which is something you do not get from HO-1 insurance. This broad coverage policy still covers the ten basic perils that HO-1 does, but it expands on the list. Less common damages, like falling objects and weight of snow damage, are added to the list. Most HO-2 policies also provide homeowners personal liability coverage. This is important because it can help protect you in case someone is injured on your property, due to negligence on your part.
An HO-3 policy covers a wide enough spectrum of issues that it will come with a list of what it does not cover, rather than a list of what it does cover. This happens to be one of the most purchased policies in the United States, simply because of its versatility when it comes to protecting a homeowner. Most HO-3 policies have a very specific exclusion list, so it is always important to check your coverage before purchasing.
HO-4 insurance is actually renter's insurance. It only covers the personal belongings in a home, and provides an insured tenant with personal liability coverage.
HO-5 coverage provides homeowners with a wide range of protection for their home, property, and the contents of their home. Like HO-3, HO-5 only lists the damages it does not cover. An HO-5 policy has the most extensive list of items and damage coverage that is offered in a home insurance policy. Even so, it is still always very important for a homeowner to know exactly what their policy does and does not cover.
HO-6 insurance is to help condominium owners fill the gap for things that are not covered by their association.
HO-8 coverage is for homeowners with older homes. Depending on the age of your home, you may not be able to get the other types of policies listed here. You need this type of insurance if the value of your home is less than what it would cost to rebuild. Like the more basic policies, an HO-8 policy has a list of items that are covered,
These are just basic summaries of the types of homeowners insurance you can buy. Policies may differ from provider to provider, so always read your policy before you buy. Some providers will also offer additional coverage on an a-la-cart basis.