Home Insurance Articles
Coverage Under A Basic Home Insurance Policy And What It Will Protect
2010-04-03
Every home insurance policy will have some commonality in terms of what it covers and what it excludes. Home insurance coverage, however, does vary slightly by state and varies greatly by the type of policy purchased. Options in home insurance range from plans that cover only the most basic damage to a home, all the way up to policies which include every item of any value in an entire household. Knowing what the basic plans cover and what they don't is essential before shopping around for any home insurance quote.
The most basic policy in a state is typically known as an HO-1 policy, also called a "basic" policy. This plan will cover only certain damages, all of which will be laid out in the policy documentation. If the type of damage a home suffers is not specifically listed in the agreement, the company will not pay out. The types of damage covered in a basic insurance policy are just that - basic, and are known in the insurance world as "perils". The most common HO-1 policy will include coverage against 11 standard perils, including damage from fire, lightning, vandalism, theft, or riot. An expanded type of the HO-1, known as the HO-2, covers 17 perils, including the original 11 listed on an HO-1. Both of these home insurance policies are what are known as "named peril" coverage, in that they cover only what is specifically named in the policy.
By far the most common type of home insurance coverage currently purchased in the United States is the HO-3 or "broad" insurance policy. It may also be known as "comprehensive" or "all-perils". Often, these policies take the opposite approach to the HO-1 or HO-2. Instead of naming perils which are covered, the policy will list perils that are excluded. This can include things such as flooding or damage due to gross negligence. If a peril is not listed on a broad HO-3 plan, it means that it is part of the home insurance coverage. It is worth noting that all plans carry exceptions. An HO-1, for example, will often not carry coverage for any items stolen from a home, whereas an HO-3 almost invariably will. An HO-3, however, will not typically cover stolen jewelry or expensive art, at least to any significant amount. Add-on coverage for specific items or a class of items is often purchased by those wanting coverage more tailored to their needs.
Although all home insurance policies will protect homeowners to some degree, the type of policy will dictate to what perils are covered and what level of coverage is offered. Before purchasing any home insurance, it is wise to know the details of the basic insurance policy options.