From houses, apartments, condos, mobile homes, to historical homes, any home requires homeowner insurance policy. Among other things, homeowner insurance will protect your property from damages caused by fires, theft, vandalism, falling trees, and floods. However, it’s essential to understand those home insurance covers come in different types. Thus, it’s crucial to choose an option that suits you. We will list some common types of insurance covers in this article to help you navigate and select the best one that suits your needs.
Of course, HO1 policies exited the market. However, you should understand how they work. These policies are limited but less expensive. However, they don’t cover more aspects. Thus, it’s challenging to get these policies on the market.
HO2: Broad Form
Broad form policies cover things such as accidental discharge or water overflow, freezing of household systems, random cracking or burning of household systems, falling objects, the weight of ice/snow, as well as accidental damage from electrical current.
Aside from dwelling coverage, HO2 policies also protect your personal belongings and your liability.
HO3: Special Form
These are some of the most common home insurance policies. They’re generally affordable. And since they’re comprehensive peril policies, they cover everything. That includes earthy movement, power failure, war, the ordinance of the law, neglect, water damage, wear/tear, nuclear hazards, mold, theft, intentional loss, mechanical breakdown, government action, vandalism, birds, insects, rodents, discharge, and seepage of pollutants.
HO4: Tenant’s form
It is also known as rental insurance, the HO4 policies are meant for rental homes and apartments.
HO5: Comprehensive Form
Though comprehensive form policies are highly expansive, they’re also the most expensive. They reimburse both dwellings as well as personal property coverage claims based on a replacement cost (RCV) approach, which caters to property replacement.
It’s important to note that the HO3 policies tend to vary from one insurer to another. However, most of them are based on actual cash value (abbreviated as ACV). That means that you will be paid the exact amount less depreciation.
These policies (i.e., HO3) tend to be open peril and are used for dwelling. On the other hand, the HO5 policies come with extended limits when it comes to losses as well as damages. Thus, read the terms before insuring things like jewelry, fine furs, as well as jewelry.
Purchase HO5 policies if you have a newer home. Also, follow this route if your home is located in a relatively secure area.
HO6: Condo form
These policies are for condo homes.
HO7: Mobile home form
These policies are for those with mobile homes.
HO8: Older Home Form
HO8 insurance policies are ideal for homes that are 40+ years old.
7 Tips on how to choose homeowners insurance
1. Correct assessment of content and continent
One of the most important aspects to keep in mind when purchasing home insurance is the concept of underinsurance.
Underinsurance occurs when the value of the insured capital is less than the new replacement value of the insured object. So we must include both of the content (standard furniture, jewelry and money, and some objects of exceptional value) and the value of the building), since, in the event of a claim, the insured will be compensated with an amount proportional to the sum insured.
2. Basic and complementary coverage
The risks covered by each insurance can vary from one company to another. Mainly, the damages that almost all of the companies include are those caused by the following: fire, smoke or explosion, water leaks, meteorological phenomena such (snow or hail, lightning strike, change of locks, electrical damage, breakage of mirrors, glass, sanitary ware, etc.).
In addition to the mentioned coverages, many others can be added in a complementary way, such as home assistance, which can be 24 hours; robbery on public roads; urgent medical attention; pet insurance; travel assistance, etc.
3. Civil liability in home insurance
Civil liability is usually one of the basic coverages and one of the most important when it comes to home insurance since it is in charge of covering the damages that could be accidentally caused to third parties. This type of damage can be due to water leaks or objects that fall from a window, the roof, or the facade, among others. The costs and compensation for such damage can cause severe disruption to the family economy.
It is essential to know the limit set for this coverage, which will be higher depending on the premium to pay.
4. When to report the claim
Claims must be communicated within seven days unless a longer term has been set in the policy. In the event of default, the insurer may claim the damages caused by the lack of declaration, reflected in the Insurance Contract Law, in its article 16.
5. What does the insurer take into account to calculate the premium?
The premium is the cost of the insurance established by the insurance company. Several factors determine this cost. Among them, in addition to the insured capital, the companies will take into account the identity of the insured and the year of construction of the home, postal code, the use made of it (residence versus professional activity), and if it is inhabited or no. If the action is professional, the company can refuse to insure.
On the other hand, the company will also take into account when calculating the premium, if recent reforms have been made to the pipes and the electrical system since these are one of the most critical problems.
6. Lack and exclusions
The insurer may impose a grace period, that is, a period until which the policy will not be effective, and during which they will not cover the damages that may occur.
In addition to grace periods, you can find risks excluded from home insurance. Those are damages originating from public pipes if the house is rented to a third party, and you have not reported it to the company or water freezing. It also applies to the homes that have been uninhabited for more than 72 consecutive hours, etc.
7. Compare Home insurance
Choosing home insurance can become very complicated due to the great offer that the market presents. For this reason, you can find the cheapest insurance and avoid ending up paying more.
Are you planning to purchase a home insurance cover? Well, it’s an excellent investment. It will not only give you the peace of mind you need but also protect your home from different types of calamities. From flooding, water damages to fires, homeowner insurance is one of the best investments you can make and live stress-free. But you should purchase the right cover for your home. The above guide will help you understand different types of home insurance covers and how to choose a cover that suits your needs. Visit https://www.moneyexpert.com/home-insurance/. It will help you get the best policy.