Insurance Policy Report

Homeowners Insurance Policies - The Various Types

The homeowners insurance sector in the US caters to the protection and indemnity needs of people who have spent their hard earned money in buying homes. Current homeowners insurance policies in the US are based on the Homeowners 2000 Program (HO 2000), which has incorporated various changes based on court decisions and changing lifestyles after the last revision in the guidelines made in 1991.

The focus of this article is on the various types of homeowners policies currently in vogue in the US.

Homeowners insurance policies are available for those dwellings in which not more than two boarders or two families are allowed to occupy one residence. Further, such policies are available for one to four family dwellings. Moreover, such policies are available purely for private residences, except that day care home office businesses are included. For such businesses set up at homes, cover for professional liability is not included in the homeowners insurance policies. The HO 2000 program includes six major homeowners insurance policies. HO policies do not cover house trailers or other mobile homes such as caravans. These mobile homes are covered under other insurance policies. HO-1 policy: This policy has been phased out by many US states because of its narrow coverage. It covers 11 specific dangers that include vandalism, smoke, fire or lightning, hail or windstorm, damage by glass/ safety, riot, aircraft, volcanic eruption, and theft. HO-2: policy: It provides indemnity that includes 17 specific dangers. It is known as the basic/named perils policy. The name denotes the fact that all perils which are not specifically named in the policy are automatically excluded. Damage from freezing water from leaking pipes or plumbing accessories is included in the coverage. It also provides coverage for living expenses, if the residence you have insured becomes uninhabitable. It is a costly policy to take as the insurance premium for this policy is high. HO-3 policy: This commonly bought policy is known as the open perils policy. It covers everything except specific perils. Flood risk coverage is not provided. In fact, no homeowners insurance policy covers flood insurance. It covers damage to your house or other associated structures that occurs directly, except for those dangers that are specifically excluded. Personal property coverage is limited to named perils, as covered in the HO-2 policy. You get full replacement risk coverage for covered losses on realty without any depreciation deductions, subject to certain restrictions. HO-5 policy: It is known as the comprehensive coverage policy. It also includes risk coverage for art, antiques, and jewelry. It can cover building code upgradation costs and those for sewer backups. This policy is definitely cheaper than other policies with these extras added. It includes loss to personal property from direct damage through the open perils classification, rather than the narrow coverage you can get from HO-2 or HO-3 policies. Besides these homeowners insurance policies, there is the HO-4 renters policy, HO-6 condo/coop policy, and HO-8 modified homes/older homes policy.