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The Right One: Which Insurance Is Suitable for Your Home?

There is no one-size-fits-all where insurance is concerned. There are different insurances for different property types, such as old homes, condos, co-ops, single-family homes, and mobile homes. If you are looking for insurance for a condominium, you can select the cover type depending on the kind of protection you want for your home and property.  That said, here are some insurance types you may consider.

HO-1: The Basic Policy

This is the most basic type of a homeowner’s insurance policy. It only covers the home structure, attached structures such as decks and garages, appliances, and other home features such as carpeting. However, this cover type does not include additional living expenses, liability, and personal property. Because of its lack of coverage on key items, it is not a popular choice for the majority. The basic policy only covers for the damage or loss by:

  • Fire and lighting
  • Vehicle
  • Smoke
  • Vandalism
  • Aircraft
  • Theft
  • Falling objects
  • Explosion
  • Riot or civil commotion
  • Windstorm and hail

HO-2: The Broad Form Policy

Policies in this category are an upgrade from the basic insurance type, thus are more common. This insurance type will cover a home at its replacement cost and other personal property items at their actual cash value in case of a problem. In addition to the perils covered by the basic insurance, this type adds six more payable risks to your cover. These include:

  • Freezing
  • Volcanic eruption
  • Weight of ice, snow, or sleet
  • Accidental overflow of water or a water body
  • Accidental and sudden damage caused by artificial electrical current
  • Unexpected breakdown of in-built appliances such as heating systems and air conditioners

HO-3: The Special Form

This is the most common type of homeowners insurance policy sold today, accounting for at least 85 percent of all homeowner’s insurances. It is considered an all-risk cover for your home and personal property. It often protects you against everything save for a few causes that are usually outlined in the cover. The perils not covered in this policy include:

  • Government action
  • Nuclear hazard
  • Ordinance or law
  • War
  • Flooding water damage
  • Intentional loss
  • Smog, rust, and corrosion
  • Industrial and agricultural smoke
  • Mechanical breakdown
  • Power failure
  • Damage by insurer’s animals
  • Pollution
  • Wear and tear

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This insurance covers your home at its replacement cost and personal property on its cash value. Most insurance companies will ask you to include an endorsement to cover the replacement cost clause for personal property at an additional premium. Other companies have the replacement cost in the primary policy.

HO-4: The Contents Broad Form

Popularly referred to as the renter’s insurance, this policy is specifically tailored for people who lease condos, apartments, single-family homes, among other home types. This insurance cover takes care of the personal property found within the rental property and any other personal property that you own in the world.

It also covers additional living costs and liabilities in case your home is damaged and you require a temporary place to live in. The contents broad form protects against the 16 dangers listed in the basic and special insurance form policies. In this insurance arrangement, personal property is covered at its replacement cost.

HO-5: The Comprehensive Form

This insurance type is as good as its name suggests. It is the widest and strongest form of insurance for home protection. While it highly resembles the HO-3, they both have significant differences, as discussed under.

In this cover, your home and personal property are automatically insured at their replacement cost, while under the HO-3 policy, you must pay extra money for replacement cost protection for your personal property.

HO-5 policy has a high coverage limit for expensive items that have strict coverage limits. This property type includes fine jewelry, special electronics, fine furs, among other things. It also provides all-risk coverage for your home and personal properties. HO-3, on the other hand, has all-risk coverage for your home but limited coverage on private property.

This insurance cover type is suitable for anyone with high-net-worth property or for a person who resides in a high-risk area.

Suppose you intend to purchase an insurance policy for the first time or want to upgrade what you have. In that case, understanding the various types and what they cover is of high importance.

Always ask questions about what is covered, what is not covered, and what you can do about it. Doing so can avoid years of paying for insurance only to realize it cannot help when you need it. So take the necessary steps to know what you need and make a well-informed decision.

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