Home Insurance Articles
Three Common Types of Homeowners Insurance Policies
2010-07-26
Homeowners insurance is a necessity for every homeowner. In fact, most lenders now require homeowners insurance as part of an offer of financing, and they will not finance a home unless it is insured by the new owner. There are several types of homeowners insurance, all regulated by the government and all meant to help you protect your home, property, and even your personal possessions. Some types of homeowners insurance are more common than others, of course, and these types are the kinds that insurance agencies are most likely to offer when you ask for home insurance quotes. Below you can find out more about three different types of common homeowners insurance.
For example, an HO-2 insurance policy is a very basic policy. Particularly now that HO-1 policies are no longer legal or acceptable in most states, an HO-2 policy is often the least amount of coverage that a homeowner can obtain. This kind of policy is mainly limited to coverage of basic property damage from sources such as fire, hail, explosion and theft. It usually does not cover personal property.
HO-3 is the most common type of homeowners insurance. It is designed as a blanket policy and is one of the broadest types of insurance on the market. It is specifically meant to cover most risks and coverage issues. An HO-3 policy covers the protection of the structure (meaning the house itself). It also includes coverage of personal property such as jewelry, electronics and antiques, as well as liability coverage. Liability will cover the homeowner in case someone who does not live on the property is hurt or injured in the house or on the property. HO-3 policies, however, do not generally damage due to flood, earthquakes or nuclear accidents. These are usually called exclusions. Many home insurance quotes are based around HO-3 policies, offering variable levels of coverage.
An HO-8 home insurance policy is typically offered to owners of older or historic homes. Similar to an HO-3 policy, an HO-8 policy is useful to owners of older homes because it covers the cost of the home and the repairs to it based on damage caused by sources covered in most insurance policies like fire, water and heating issues. An HO-8 allows the homeowner to insure holder homes at lower rates. The policy can do this for the homeowner because it insures the home for its current value and not for the cost it would take to rebuild the home-a cost that is likely to be significantly higher than that of a newer home due to the cost of vintage materials and labor costs.