What is Homeowners Insurance?
And why you need itHomeowners insurance secures your financial interests if your home is destroyed or damaged by a covered peril. The ten named perils are: fire, wind or hail, explosion, civil commotion, aircraft, vehicles, smoke, vandalism, theft, and falling objects. Six additional perils are ice or snow, water, appliance malfunction, freezing, electrical damage, and volcanic eruption. There are eight kinds of insurance for different property types and coverage needs.
Home Insurance Basics
Types of Home Insurance| Home Insurance Type | Coverage | Benefits |
|---|---|---|
| HO-1: Basic | 10 named perils | Mostly nonexistent nowadays, but cover actual cash value of home. Premium rates based off several factors. |
| HO-2: Broad | 10 perils + 6 more | Cover dwelling at its replacement cost and personal property at cash value. Premium rates based off several factors. |
| HO-3: Special | All-risks coverage for named perils and personal property. Some excluded perils. | Most common. Covers replacement cost and personal property at cash value. Premium rates based off several factors. |
| HO-4: Content Broad | Renters insurance for personal property, liability, and living expense. 16 perils. | Personal property covered at its replacement cost. Premium rates based off several factors. |
| HO-5: Comprehensive | Similar to HO-3, with some notable differences | Best and most robust form of home protection. Mostly for high-net-worth properties. Premium rates based off several factors. |
| HO-6: Unit-owners | Condo insurance. Coverage can vary with HOA insurance. | Includes personal property, loss of use, personal liability, and medical payments. Premium rates based off several factors. |
| HO-7: Mobile Home | HO-3 designed for mobile homes. | Includes most types of mobile homes. Premium rates based off several factors. |
| HO-8: Modified Coverage | 10 named perils. Reimbursement based on home cash value. | For homes that don’t meet insurer standards (older homes). Home can be covered without full updates. Premium rates based off several factors. |
Who needs Homeowners Insurance?
In most cases, homeowners insurance is required by the lender. They want to ensure their financial investment in your home is protected. Other types of insurance may also be required in addition to homeowners insurance.
What type of Homeowners Insurance should I get?
Most lenders will specify the amount of insurance you must carry. However, your family and possessions hold a value much higher than the physical structure of your home. That’s why having enough, or even more, insurance than what’s is required is important. Luckily, our agents can simplify this process.
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Frequently Asked Questions
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