Types Of Home Insurance Policies
Home insurance is one of the most popular type of insurance, simply from the fact that everybody has to have a home. Having a home, like having food, is one of the two most basic needs for a human being, and so it's normal that one would want to insure that. Should a fire occur, or a tornado destroy your house, you don't want to be out on the street if you don't happen to have the cash on hand to replace it. There's many different types of home insurance policies, categorized based on what type of home it is, and what is covered. These are the types of home insurance policies.
This standardization was done by the International Organization for Standardization, also known as ISO. It classified all home insurance policies into 8 different groups, from HO1 to HO8. It used to be that the insurance plans were not standard across countries, or even across states, which caused a lot of mistakes when moving from one location to the next. Now, in the US and in many other countries, the ISO model is followed. It enables property and liability clauses to be at least somewhat similar across a same type of insurance policy, regardless which insurance company you use.
HO1, the first type, covers basic policies. It's fine for any house, and provides 11 basic protections: fire, hail, vandalism, theft, damage made by vehicles or airplanes, civil unrest, glass breaks, smoke, volcanic eruptions, and personal liability. Note that it specifically excludes floods and earthquakes. This policy is usually good for typical homes who don't need specific protection clauses.
The second one is HO2, which is a broad policy. On top of what HO1 covers, it adds some more protections, namely against ice, falling objects, flooding, ruptures of heating or A/C systems, and electrical problems. Note that usually the flooding part of an HO2 policy only covers accidental ruptures of water mains, or overflow from other pipes, not acts of nature, where a river comes in and floods your home.
HO3 is the most broad type, also called an all-risk policy, covering almost everything, although again earthquakes and some types of flooding are excluded. The other types don't actually cover more protections, but are meant for different types of homes. HO4 covers rents, for tenants living in apartments, HO5 is an open peril insurance, which could cover locations that the public may access and cause damage. HO6 cover condominiums, while HO8 covers older houses, typically those that are seen as historical buildings.
While the categorization of the policy determines the starting point, it's important to remember that the actual clauses inside of it have final say, and you should base yourself on what the actual contract says to determine whether or not something is covered in a specific policy..
by: Casey Trillbar