Authored by Deborah Dera in Insurance
Published on 10-09-2009
No two homeowners policies are alike. Every company includes special perks and coverage when they write their homeowners coverage forms but there are a few general basic policy types you should be familiar with when looking to purchase a policy. The type of home you are planning to live in or purchase will determine exactly what type of coverage you need to buy.
Dwelling Coverage (HO-1 or HO-2)
Commonly referred to as HO-2 coverage, a dwelling policy provides coverage against specified perils (or certain types of risk) for the home itself. Those planning to purchase a home that they will then rent to others should purchase dwelling coverage. Your policy would cover you for damage to the house itself (by fire, lightning, etc) or for physical injury to a person who visits your property (if it is proven you were negligent in making a repair that caused their injuries). Your tenant would be responsible for purchasing coverage for his own belongings or liabilities.
Homeowners Coverage (HO-3)
The HO-3 policy is the most traditional type of policy purchased by those who own their own homes and live on the property. Homeowners coverage comes in various formats with different benefits depending on the company and “form” they use but you will always receive coverage for the home, coverage for detached dwellings (like your garage), property coverage for your belongings, loss of use coverage (to help pay for hotels or rentals if you have to leave your home while it is repaired due to a covered cause of loss), and liability coverage and/or medical payment coverage to pay for the medical bills of anyone injured on your property.
Renter’s Coverage (HO-4)
Renter’s coverage, also known as HO-4 coverage, is for individuals who rent homes or apartments. Renter’s coverage is rather limited, providing coverage for a person’s personal belongings if they are damaged due to a covered cause of loss. Under an HO-4 policy you will also receive liability coverage, medical payments coverage, and a limited amount of coverage for living expenses if you need to temporarily relocate.
Condominium Owner’s Coverage (HO-6)
The condominium owner’s policy, otherwise known as the HO-6 form, covers those who own condominium units. Condominiums are special because owners do not necessarily own the entire building – just their specific unit. The condominium association usually purchases its own insurance to cover the exterior building, common areas, and grounds while condo owners are responsible for purchasing coverage for their units alone.
The difference between coverage for a condo versus something like an apartment is that with most condominiums the owner is responsible for “the walls in.” This means that you as the owner are not responsible for the “studs” or framework of the building or common areas but you are responsible for anything from the drywall into the rest of your condo unit – or anything that is permanently attached. You’ll also need coverage for your personal belongings, liability, and potential loss of use.
Understanding the types of coverage provided under each form is an art in and of itself but knowing which type of insurance you need from the start is imperative to ensuring you have the coverage you need in the event of an emergency.
