The Main Types of Homeowners Insurance Explained
If you’re insuring a home, it is a key part of good homeownership and essential in order to obtain a mortgage.
There are many different types of homeowners insurance policies out there, so it’s important to know more about them.
Read on to learn some information about your homeowners insurance options so you know which one is right for you.
Basic Homeowners Insurance
HO-1 insurance is the most basic of all types of homeowners insurance available. This policy typically covers the home for its actual cash value and in some cases, your personal belongings are not included. It’s best to avoid this type of policy since you won’t be reimbursed if your furniture gets ruined, for example.
A basic coverage plan will insure 10 specific perils including fire or lightning, hail or windstorms, smoke, vandalism, and explosions, just to name a few. Any damage not on the list of known perils will not be covered, and many insurance companies no longer offer this policy due to its limited coverage.
Types of Homeowners Insurance: Broad Form
A broad form plan, also called HO-2 insurance, is a better form of property insurance because it covers a wider range of perils. When insuring a home, it’s important to choose a plan that will cover not just the property itself, but also your personal belongings.
The HO-2 plan covers everything that an HO-1 policy does in addition to other perils like damage caused by the weight of ice or snow on your roof. It also protects your property in instances of damage caused by falling objects, freezing, or the accidental overflow of water from a nearby stream, for example. This is a more common type of plan but it’s still quite limited in scope.
Special Form Insurance
Special form insurance or HO-3 coverage is the most common type of homeowners insurance plan. It covers the home at its replacement cost and personal property up to the actual cash value. You may need to add an endorsement if you need to cover higher-value items, which are usually available at an additional cost.
This type of insurance also covers a much broader amount of perils although there are some things that are excluded like floods, earthquakes, landslides or mudslides, neglect, sinkholes, nuclear accidents, and others. An HO-3 plan will cover personal property that is damaged by any listed perils in your policy. For most homeowners, this is the best option to ensure you get the protection you need.
Find Your Policy Today
These three most common types of homeowners insurance are available to you, so be sure to talk to an insurance agent before you enroll in a policy. The right coverage will keep your home’s structure and everything in it protected if something goes wrong.
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