Homeowner’s insurance policies came into existence in the 1950s. The Insurance Services Office (ISO) and the American Association of Insurance Services (AAIS) developed the standard forms which are used in homeowner’s insurance policies. The following eight standard policy types are offered:
(i) HO-1; Basic Form
It is a basic limited policy form that provides coverage on a home against 11 listed perils as compared to the 16 perils covered by standard policies. The exceptions include floods, earthquakes etc.
This policy also does not cover is the personal liability for those injured on your property, and your belongings.
Many mortgage companies find HO-1 policies inadequate. This is the reason that HO-1 policies are not widely used. In fact, most states no longer offer this type of coverage
(ii) HO-2; Broad Form
It is a more advanced form of HO-1 that provides coverage on a home against all 16 listed perils, which includes all 11 on the HO1.
However, it is a basic policy that requires lower premiums and also provides lower coverage. The HO-2 is a “named peril” policy, which lists the events that would be covered. This also means that damages caused by events other than those listed on the policy, will not be covered.
(iii) HO-3; Special Form
This is the most popular type of homeowners insurance. This is the most comprehensive form used for single-family homes. The policy provides “all risk” coverage on the home with some perils excluded, such as earthquake, flood, landslide or mudslide, nuclear accident and sinkholes. Therefore, this insurance covers all disasters except those that are specifically excluded. This means that the home is protected against all perils other than those specifically mentioned in the exclusions.
The HO-3 also insures attached structures, such as a garage, and also the belongings. It also includes personal liability coverage if some is accidentally injure or their property is damaged.
(iv) HO-4; Contents Broad Form
It is a renters’ insurance policy and covers the belongings against all 16 perils. It only covers personal belongings and not the building, as it is the responsibility of the landlord.
HO-4 policies also provide liability insurance in case someone is injured in the rented your home. It also provides living expenses in case the tenant needs to stay elsewhere temporarily while the rental property is being repaired or renovated.
(v) HO-5; Comprehensive Form
This is similar to a HO-3 policy, but it s more comprehensive and provides better protection for personal belongings. An HO-5 insures belongings against all causes of loss that are not specifically excluded. In HO-3 insurance, only those causes are covered which are named on a specified list, whereas an HO-5 form financially protects against all perils unless the policy specifically excludes them in writing.
HO-5 policy is generally available to those who own a new, well maintained home within close distance to fire protection services.
(vi) HO-6; Unit Owners’ Form
It is a condominium insurance policy similar to HO-3 for condominium owners. It covers the personal property, walls, floors and ceiling of condo owners against all 16 perils. It also includes liability insurance. The building structure and the rest of the condo is covered by a separate policy purchased by the condominium association.
(vii) HO-7; Mobile Homes Form
It is similar to HO-3. It is especially applicable to mobile homes or manufactured homes.
(viii) HO-8; Modified Coverage Form
This is an insurance policy especially designed for the owner-occupied older home whose replacement cost far exceeds the property’s market value. It is similar to HO-3, but it has better provisions to suit older homes. It is especially used for historic homes and registered landmark dwellings. As the older homes are not eligible for full replacement cost insurance, so the reimbursement for damages is based on the replacement cost minus depreciation.
In case the home is not eligible to be covered under any one of the homeowners insurance policy forms detailed above, it can still be insured. This is called a DF-1 or fire and extended coverage policy. It offers very limited coverage.
The DF-1 policy form usually covers such perils as, fire and lightning; windstorm and hail; explosion; riot or civil commotion; aircraft; vehicles; and smoke.
A home is one’s castle. It is a safe haven for the homeowner where he can find peace, comfort and safety. It is an institution in itself. Here people raise their families and spend a lifetime. A home is the most cherished possession for anyone.
Every homeowner should be aware about how home insurance can help protect their paradise from external and unseen calamities. It is difficult to rebuild a house again in case of serious mishaps. This is where home insurance becomes a vital life-saver. Every homeowner must educate himself about the benefits and deductible associated with home insurance. It is also important to choose the right coverage. Hope you found this article useful, as a homeowner. In case you wish to add or share your experience and piece of wisdom, you are encouraged to write in the ‘Comments’ page.