What Homeowners Insurance Covers
Your home insurance policy may cover up to five different types of coverage. These five common coverage options are:
Dwelling Coverage, which protects losses or damage done to the building itself, and covers replacement cost.
Other Structures Protection, which covers things like fences, detached garages, and sheds on your property.
Personal Property Protection, which covers the possessions inside your home—things like furniture, jewelry, computers and anything else that belongs to you but isn’t attached to the house.
Additional Living Expenses coverage kicks in if your home is so badly damaged that you can’t live in it until repairs are complete; this coverage pays for some or all of the expenses related to staying in a hotel or other temporary lodging.
Personal Liability Coverage, which protects you if someone sues you for injury or property damage that happened on your property.
Types of Insurance Policies
Homeowners insurance policies come in eight basic forms, although only a few of these policy types will apply to you. You’ll also have the option of adding additional coverages that might be a good idea if your area is considered high-risk to weather. These optional coverages will allow you to have property insurance with limited exclusions. The type of policy you have will determine what losses that policy will cover and your personal insurance costs. Briefly, the eight types of home insurance policies are:
HO-1, Basic Form insurance, which covers only a handful of specific perils:
HO-2, Broad Form insurance, which covers all of the perils listed in HO-1 plus:
Weight of ice, snow, or sleet
Freezing of household systems (for example, your HVAC system)
Sudden and accidental tearing apart, cracking, burning, or bulging of pipes and other household systems
Accidental discharge or overflow of water or steam
Sudden and accidental damage from artificially generated electrical current (meaning issues to do with your home’s electrical system rather than, say, a lightning strike)
HO-3, Special Form insurance, which is generally considered the “standard” homeowners insurance policy. There are two basic ways that homeowners insurance policies can approach coverage: named peril and open peril. Named peril policies (which include all HO-1 and HO-2 policies) only cover the dangers that are specifically listed in the policy.
On the other hand, open peril policies cover everything except what’s specifically listed in the policy. An open peril policy gives homeowners much more flexibility in getting coverage for unusual types of losses. HO-3s give you open peril coverage for dwelling protection (losses related to the house itself); personal property protection (losses that affect your personal possessions) are restricted to named peril coverage.
HO-4, Tenant’s Form, is the official name for renters insurance. If you rent instead of owning your home, this is the type of coverage you’d get. Renters insurance is similar to a typical homeowners insurance policy except it doesn’t include dwelling protection or other structures protection.
HO-5, Comprehensive Form insurance, is a fully open peril policy. Most HO-5 policies cover everything except:
Earthquakes and other earth movement damage, such as landslides
Non-flood water damage
Pest damage (for example, termites, birds, and rodents)
Basic wear and tear
Settling, shrinking, and other movements of your home’s foundation
Mold, fungus, and rot
Deliberate damage by the homeowner
Law-related losses (for example, the government seizes your property so that it can build a freeway over the land)
Smog, rust, and corrosion
HO-6 is condo insurance. If you own a condominium, you’d get this type of policy. Condo insurance includes personal property, liability, and sometimes additional living expenses coverage but not dwelling protection.
HO-7 is mobile or manufactured home insurance.
HO-8, Older Home Form insurance, is typically the policy of choice if your home was built 100 years ago or more.