Types Of Home Insurance Policy: Which One Do You Need?

Buying insurance for your home is a simple process if you know what type of coverage you need. The type of home you have will determine the type of policy form you need. Next, you will need to determine how much insurance you require. You can choose a basic policy that provides minimal coverage or a comprehensive one that covers all perils.

Homeowners Insurance

Homeowners insurance covers a more traditional home, usually a single-family structure without a lot of extras. The following four forms provide a wide range of coverage.

  • HO-3 – This is one of the most common forms and is referred to as a “special form” because it provides “open peril” protection against damage to the structure of your home. When it comes to your possessions, it offers “named peril” coverage which means the perils must be specifically named in the policy. It offers coverage for 16 perils.
  • HO-1 – An HO-1 is the most basic of all policies and so is named “basic form”. It covers only 10 perils. This type of policy has been phased out by many carriers because of its limitations.
  • HO-2 – The next step up is the “broad form” policy. It gets its name because it offers broader coverage than the HO-1 policy.
  • HO-8 – An HO-8 policy covers 10 perils and is meant for older homes. The policy pays the actual cash value of your damaged items. Actual cash value is basically the cost of the item minus any depreciation it may have incurred.

Renters Insurance

Renters insurance is meant to protect your possessions while you are living in a dwelling you don’t own. This is a must-have to protect you from financial loss in case someone is injured in your home, or their property is damaged.

  • HO-4 – An HO-4 policy covers your possessions but not the rental unit itself. It will also protect you from various types of liability.

Condo Insurance

Condo insurance is also known as a “walls-in” type of policy since it covers the walls, ceilings, and floors.

  • HO-6 – With an HO-6 policy, the interior structure, as well as your personal possessions, are covered against 16 perils.

Mobile Home Insurance

A mobile home is different than most traditional homes. While the coverage is similar, it does have subtle differences. It is most similar to the HO-2, but the perils may not always be the same.

  • HO-7 – An HO-7 covers your possessions and provides specific types of liability coverage. It will also cover the structure of the mobile home to an extent.

Exclusions of Standard Home Insurance Policies

No matter what type of homeowners policy you have, there will be a few exclusions. This includes specific natural disasters like hurricanes, floods, and earthquakes. While these don’t occur everywhere, they are common and quite costly. If you live in an area prone to these perils, you must purchase additional coverage. It’s also important to remember that certain possessions may be more valuable than you think and will require a supplemental policy.

While looking for homeowners insurance, you must familiarize yourself with the policy forms. Contact us at Kneller Insurance Agency today to learn about which form may apply to you.

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