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As you know “Home Owners Insurance” is required by most lenders and essential if you’re buying with cash. It’s critical that you protect your investment. But did you know that there are eight different kinds of home owners Insurance. Here’s a breakdown.
The Different Types:
HO1 and HO2 are cheap but they also cover the fewest kinds of disaster. In fact they’re called “named peril” policies because they cover only a short list of pre-identified disasters, fire, lightening , theft, vandalism volcanoes and so on.
HO4 is renters insurance.
HO6 is for condo’s and co-ops.
HO7 is for mobile homes.
HO8 is cheap basic insurance for older homes(over 40 years old). It’s primarily for for people who don’t want to upgrade their homes to meet current building codes.
By far the most common forms though are HO3 and HO5policies. They’re “open peril” policy, which means that they cover anything bad that happens except for a short list of pre-identified disasters that they don’t cover. Those not covered things are, (typically) earth movements (earthquakes, landslides and sinkholes) ordinance of law (translation: “The cost of meeting new building codes that have cropped since your home was originally built”), water damage from flooding, tides, groundwater seeping up, etc. See Index #1
HO3 and HO5 policies cover what insurance agents call the six basic protections.
- Dwelling means your house, the structure itself.
- Other Permanent Structures like your garage or detached barn.
- Contents which refers to all your belongings.
- Additional Living Expenses usually reimbursement while your home is being repaired.
- Liability, covers legal fees, medical bills if your negligence is responsible for someone getting hurt on your property etc.
- Medical for the same as above.
HO3 limits coverage to your belongings to a list of 16 named perils.
HO5 is an open perils policy for both your home and your belongings.
ConclusiThere’s always the fine print in these policies with different deductibles and limits to each policy so spend time with your Insurance agent to discuss all of the language in the policy. I’m not a licensed Insurance Agent but can put you in touch with some in the Missoula area.
