4 Types of Home Insurance Policies to Know About
websitebuilder • July 27, 2022
Whatever type of home you live in, get homeowners insurance coverage. This policy offers you financial protection in case you run into unpredictable circumstances such as fire or floods.
However, home insurance policies are not equal. For this reason, research more on home insurance coverage before purchasing any policy. This article highlights four major types of home insurance policies.
HO-1 is the most basic type of homeowners insurance policy coverage. The policy only covers the structure of your house depending on the house's actual cash value. Actual cash value refers to the replacement cost of a property after the depreciation value at a particular time. Therefore, if you need to rebuild your home, you need to source additional funds.
You may also get compensation for other attached structures in your home, including electrical appliances, garages, and carpeting.
The most common damages HO-1 insurance coverage include:
Although the HO-1 insurance coverage is generally less expensive, some people don't like this policy since it does not offer compensation for liability, extra living expenses, or personal property.
The HO-2 home insurance policy is an upgraded version of the HO-1 policy. This policy covers your home against all the damages in the HO-1 policy, including damages from:
HO-2 insurance coverage offers compensation for your home structure and personal property. Moreover, you may enjoy liability compensation. However, not all companies offer liability compensation under the HO-2 insurance policy. Therefore, contact your company to be sure.
With your home's structure, you will receive compensation according to the replacement value (the cost of replacing an item with similar quality and type). For personal property, you will get compensation according to the property's actual value.
Some people like this home insurance coverage since the policy offers compensation for personal property regardless of where they were when the accident happened. The items may have been in your house or the car.
HO-3, also known as special form coverage, is the most prevalent type of home insurance coverage in the US, especially for single-family homes.
This insurance policy covers your home and personal items. The coverage also offers compensation for extra living expenses to cater to your bills, especially if you need to live elsewhere as you rebuild or repair your home.
Another thing that this insurance policy covers is the medical bills. Most companies agree to pay medical fees for any person injured in your home during the accident, including visitors. Additionally, the insurance company may pay the legal fees if you face legal charges.
The HO-3 insurance policy provides coverage against the damages mentioned in the HO-1 and HO-2. However, you need to note that the policy offers open perils coverage. If anything happens to your home, you will only receive compensation for the risks stated in the policy. Nevertheless, insurance companies will not compensate you for nuclear, floods, earthquakes, and landslide damages.
The HO-4 insurance policy is for people living in rental properties, including apartments or condos. This insurance policy only covers the renter's personal property and liabilities. Additionally, you may receive compensation for extra living expenses. Therefore, you don't need to worry about paying insurance premiums for the housing unit since that is the property owner's responsibility.
Often the HO-4 insurance policy offers compensation for the damages listed in the HO-1 and HO-2 policies.
Before purchasing an insurance policy from any company, do your homework to avoid making mistakes. If you are looking for a reliable insurance company, contact Accredited Insurance Group Incorporated.
However, home insurance policies are not equal. For this reason, research more on home insurance coverage before purchasing any policy. This article highlights four major types of home insurance policies.
1. HO-1
HO-1 is the most basic type of homeowners insurance policy coverage. The policy only covers the structure of your house depending on the house's actual cash value. Actual cash value refers to the replacement cost of a property after the depreciation value at a particular time. Therefore, if you need to rebuild your home, you need to source additional funds.
You may also get compensation for other attached structures in your home, including electrical appliances, garages, and carpeting.
The most common damages HO-1 insurance coverage include:
- Vehicle crashes
- Fire
- Burglary
- Explosion
- Airplane crashes
- Smoke
- Protests
- Volcanic explosions
- Criminal damage
- Windstorm
Although the HO-1 insurance coverage is generally less expensive, some people don't like this policy since it does not offer compensation for liability, extra living expenses, or personal property.
2. HO-2
The HO-2 home insurance policy is an upgraded version of the HO-1 policy. This policy covers your home against all the damages in the HO-1 policy, including damages from:
- Snow weight damage
- Freezing pipes including plumbing and air conditioning pipes
- Power surges
- Accidental water overflow
- Falling objects
- Sudden bulging of in-built electrical appliances like the heating system
HO-2 insurance coverage offers compensation for your home structure and personal property. Moreover, you may enjoy liability compensation. However, not all companies offer liability compensation under the HO-2 insurance policy. Therefore, contact your company to be sure.
With your home's structure, you will receive compensation according to the replacement value (the cost of replacing an item with similar quality and type). For personal property, you will get compensation according to the property's actual value.
Some people like this home insurance coverage since the policy offers compensation for personal property regardless of where they were when the accident happened. The items may have been in your house or the car.
3. HO-3
HO-3, also known as special form coverage, is the most prevalent type of home insurance coverage in the US, especially for single-family homes.
This insurance policy covers your home and personal items. The coverage also offers compensation for extra living expenses to cater to your bills, especially if you need to live elsewhere as you rebuild or repair your home.
Another thing that this insurance policy covers is the medical bills. Most companies agree to pay medical fees for any person injured in your home during the accident, including visitors. Additionally, the insurance company may pay the legal fees if you face legal charges.
The HO-3 insurance policy provides coverage against the damages mentioned in the HO-1 and HO-2. However, you need to note that the policy offers open perils coverage. If anything happens to your home, you will only receive compensation for the risks stated in the policy. Nevertheless, insurance companies will not compensate you for nuclear, floods, earthquakes, and landslide damages.
4. HO-4
The HO-4 insurance policy is for people living in rental properties, including apartments or condos. This insurance policy only covers the renter's personal property and liabilities. Additionally, you may receive compensation for extra living expenses. Therefore, you don't need to worry about paying insurance premiums for the housing unit since that is the property owner's responsibility.
Often the HO-4 insurance policy offers compensation for the damages listed in the HO-1 and HO-2 policies.
Before purchasing an insurance policy from any company, do your homework to avoid making mistakes. If you are looking for a reliable insurance company, contact Accredited Insurance Group Incorporated.
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