There are actually a few different coverage options available when it comes to homeowners insurance. The policy you buy—also referred to as a “form” or a “policy”—will be based on your living situation and the level of coverage you select.
Here’s what we’ll cover:
- HO1
- HO2
- HO3
- HO5
- HO6
- HO8
What kinds of coverage are available for homeowners?
Homeowners insurance comes in a variety of forms and offers various levels of protection against unfavorable events.
One thing to keep in mind is that most homeowner plans, regardless of kind, do not often provide coverage for earthquakes or flooding, which means that if you reside in a sensitive area, you should do some research into separate insurance policies.
HO1
The most fundamental type of homeowner’s insurance, known as a HO1 policy, covers your house against ten identified risks.
- Lightning and fire
- Hail and windstorm
- Explosion
- Civil unrest and riots
- Vehicles
- Aircraft
- Smoke
- Vandalism and nefarious mischief
- Theft
- Volcanic eruptions
You most likely won’t be covered for events that aren’t covered by your insurance. For instance, since it wasn’t mentioned above, you wouldn’t be protected if water overflowed into your property and caused damage.
An HO1 policy won’t cover you for some significant risks, such as earthquakes, floods, and falling items, while having a rather extensive list of perils.
HO2
Another fundamental homeowners insurance coverage is a HO2 policy. It includes coverage for the ten risks specified on a HO1 policy as well as a few extras like falling items and the weight of snow, sleet, or ice. It covers a total of 16 dangers.
Compared to the HO1, the HO2 offers additional protection, but not as much as a HO3.
HO3
The most popular homeowners insurance plan is a HO3 coverage since it offers protection for your house, family, and possessions from a variety of perils.
Your HO3 policy covers the following areas in total:
- Your home
This type of insurance, often known as “dwelling coverage,” guards you against losses to your house and everything linked to it, including the garage, chimney, in-ground pool, etc.
- Additional buildings on your land
This includes the driveway, fences, storage sheds, and other buildings on your property.
- Your individual possessions
Personal property often refers to the things you own. Whether your belongings are at home or elsewhere, your homeowners insurance has your back. As a result, you are protected if your computer is taken from your car or your shed catches fire while containing a number of power tools.
Be aware that there may be sub-limits on some expensive objects, including as jewels and works of art, so be sure to purchase Extra Coverage when purchasing your insurance.
- Additional costs of living
You would be covered under “loss of use” if one of those annoying risks caused your home to become uninhabitable. Your insurance provider might even assist with basic living costs like food, laundry, parking, etc. as well as a temporary somewhere to stay if necessary. This coverage never has a deductible.
- Personal responsibility
The term “liability” describes your responsibilities. In the context of insurance, this means that your insurance provider should have your back if, for some reason, someone is hurt on your property and it’s your responsibility, or if you or anybody else mentioned on your policy damages someone else’s property or belongings. Just to be quite clear, we’re just discussing unintended circumstances.
- Medical costs
Medical payments are a quick way to resolve minor injuries but personal liability only comes into play when you are sued. The purpose of health insurance, not house insurance, is to pay for your own medical expenses. However, home insurance can assist pay for injuries suffered by visitors who may have been hurt at your home or by persons you may have accidentally hurt outside of your home.
HO5
In comparison to a standard homeowners policy, a HO5 policy offers more protection and higher coverage limits. The Rolls Royce of insurance policies is a HO5 coverage. It gives your standard homeowner’s insurance coverage a ton of added benefits.
The general framework of HO3 and HO5 insurance is very similar, although HO5 policies are a little bit more thorough in terms of insuring your belongings. An HO5 provides an open perils coverage for personal property, which means your belongings are protected unless they are specifically excluded. This is one of the primary differences.
One of the greatest changes is how your goods are insured; under a conventional HO3 policy, they are covered for real cash value, whereas under a HO5 coverage, they are insured for replacement cost. At Lemonade, we provide you a HO3 policy, but it also includes this HO5-style benefit since we think you should always have replacement cost coverage for your belongings.
HO6
An HO6 policy, commonly referred to as “walls-in” coverage, is homeowners insurance for a condominium. Due to the fact that condos have Homeowners Associations (HOAs), each HOA will have an insurance policy in place for the communal areas. However, your condo insurance quotation will cover the interior walls of your condo, your personal property, personal liability, and loss of use, comparable to a conventional HO3 house insurance policy. Your HOA is responsible for insuring your common outdoor space and the structure itself.\
HO8
The HO8 insurance coverage, which is the least popular one, is created to cover much older homes that would be nearly impossible to replace if they were destroyed.
The 11 dangers specified in the most fundamental HO1 policy are covered by a HO8, which operates on a “designated peril” basis. An HO8 insures your house at market value, sometimes known as actual cash value, because it is designed for older homes. This implies that in the event that something were to happen to your house, your insurance company would value it at what it would get on the current market.
Should I get homeowners insurance?
Your lender will force you to buy homeowners insurance if, like the great majority of homeowners, you bought your house with a mortgage loan. However, even if you’re not required to buy a policy, you should buy homeowners insurance so that you won’t be responsible for paying for everything if something awful occurs to your house.