What your Homeowners Insurance Cover
A homeowners insurance policy is a package policy that combines more than one type of insurance coverage into a single policy. The cost of the package policy is usually cheaper than if all of the coverages were to be purchased separately.
The insurance industry calls the cause of loss, such as fire or theft, a "peril". To determine what your homeowners insurance policy covers, you'll need to check for which perils your policy lists.
In general, according to the Insurance Information Institute, homeowners insurance policies cover the following potential perils:
Types of Homeowners Insurance Coverage
There are four types of coverages contained within the standard home insurance policy. A homeowner’s policy generally provides the following areas of coverage:
Property damage coverage, also referred to as "Dwelling" pays if your home, other structures and belongings are damaged or destroyed by something your policy covers.
Personal liability coverage pays medical bills, lost wages, and other costs if you unintentionally cause an injury to another person or cause damage to another person’s property that you are legally liable for. It also pays your court costs if you’re sued because of an accident.
Medical payments coverage pays the medical expenses of people hurt on your property up to a specified amount, regardless of whether you were at fault. It will also pay for some injuries that happen away from your home. For instance, if your dog bites someone at the park. This coverage does not apply to you or a member of your household.
Additional living expenses coverage will pay for the additional expenses you incur when you cannot live in your home because of damage or loss that is covered by your policy. This includes rent, food, and other costs you wouldn’t have if you were still in your home. For example, if you have to move into a motel or apartment while your house is being repaired to fix damages your policy covers, your insurer will pay the cost of this temporary housing subject to the policy’s terms, conditions and limits.
Read your insurance policy carefully to make sure you understand exactly what is and is not covered.
Flood damage is not covered by basic Homeowners insurance. To protect against damage caused by flooding, you need to buy a flood insurance policy.
Always review your policy or contact your agent to identify the limitations and exclusions of your coverage.
Types of Homeowners Insurance Policies
Home Insurance Policies have various names depending on the insurer that sells them. However, the standard home insurance policies are often referred to as:
HO-2 Broad Form (Named Peril)
HO-3 Special Form
HO-4 Renters Insurance (Contents Broad Form)
HO-6 Condominium Unit Owners
Market Value or Older Homes Forms (Modified Coverage Form)
The type of policy you choose should depend on:
Your type of housing
How much you are willing or able to pay
How much coverage you believe is necessary for your situation
Covers your home and personal property, but only if damage or loss is caused by fire, smoke, wind, hail, lightning, explosion, vehicles, civil unrest, theft or vandalism. This policy is sometimes called the HO-1 policy form. It is the most basic homeowners insurance coverage and costs less than coverage under other policy forms. This policy covers your home and personal property for their actual cash value.
Broad Form Policy – Also referred to as HO-2 policy form or named peril policy form, covers your home and property, but only if damage or loss is due to perils specifically listed in the policy. It covers slightly more than the basic policy form. Broad Form policy covers your home for its replacement cost value and your personal property for its actual cash value.
The HO-2 (Broad Form) generally covers the following perils:
1. Fires and Wildfires
2. Removal of property endangered by any insured peril
3. Windstorm
4. Hail
5. Explosions
6. Riot and civil unrest
7. Vehicle or aircraft damage to your property
8. Smoke
9. Vandalism and malicious mischief
10. Breakage of glass
11. Theft
12. Falling objects
13. Weight of ice, snow, or sleet damage
14. Collapse of building and any part thereof
15. Sudden and accidental damage, cracking, burning or bulging from steam or hot water heating system or appliances for heating water
16. Accidental discharge or overflow of water or steam from plumbing or heating systems
17. Freezing of plumbing, heating or air conditioning systems and domestic
appliances
18. Sudden and accidental injury from artificially generated electrical currents
19. Limited coverage for trees, shrubs or plants
20. Additional living expenses
21. Personal liability insurance protection
22. Medical payments coverage
The HO-3 (Special Form Policy) covers your home for its replacement cost value and your personal property for its actual cash value.This is the most common type of homeowners insurance coverage and covers more than the basic policy form but less than the comprehensive policy.
The HO-3 (Special Form Policy) generally provides the following coverage:
Covers your home against all perils except those specifically listed as exclusions in the policy.
Common exclusions are: flood, earthquake, neglect, wear and tear and deterioration, war, nuclear accident, damage resulting from freezing of an unoccupied building, enforcement of an ordinance, damage to fences, patios, swimming pools, etc., caused by freezing, thawing or pressure or weight of ice or water, whether driven by wind or not.
Covers personal property against damage or loss caused by perils listed in Form HO-2.
C. The HO-4 (Renter's Insurance). This policy insures your household contents or personal possessions, provides for additional living expenses in the event of a covered loss that makes your home, apartment or condominium uninhabitable, provides you with liability coverage, and provides for medical payments to others It covers all perils listed in the HO-2 Form
Covers your home and personal property against all perils except those specifically listed as exclusions in the policy. This policy is sometimes called the HO-5, premier or open peril policy form. It provides the most coverage of any of the policy forms but may cost more. This policy covers your home and personal property for their replacement cost value.
D. The HO-6 (Condominium Unit Owners). This policy protects condominium unit owners against loss or damage to their personal property and may include coverage for any additions or alterations to the interior of the condominium unit not insured by the condominium association (these are known as “improvements and betterments”). The policy covers all perils listed in the HO-2 Form. You also can purchase an endorsement to your HO-6 policy that would provide you with coverage for assessment, a fee charged by your condominium association. Your producer will be able to explain the limits to the alterations and additions coverage, and help you determine whether you need to increase your policy limits
Covers your home and personal property but only if damage or loss is due to perils specifically listed in the policy. This policy is sometimes called the HO-8 policy form. It is for older homes, where the cost to rebuild is greater than the market value. It is similar to the basic policy form but covers less than the broad form policy and comprehensive policy. This policy covers your home and personal property for their actual cash value.
A homeowner’s policy may provide coverage for different perils for the dwelling and for personal property. The policy may also have different deductibles based on the peril.
To have appropriate and adequate coverage for your home or business, it is important for you to consider the perils for your area. Homeowners, renters, and business owners who live in areas at high risk for losses from a particular peril may pay a higher cost for coverage. Always check your individual policy for details.
