If you own a home, you must have some form of homeowner’s insurance to protect your property and belongings.
When it comes to choosing among the various types of homeowner’s insurance, how do you know what you need?
This helpful guide will explain the differences between insurance types so you can be sure you’re getting the coverage you need.
Understanding the Basics
The purpose of any type of insurance is to help you recover losses in the event of an emergency or disaster.
No matter what kind of insurance you have, it should cover a few basic things.
First, your homeowner’s insurance will pay to repair any damage to the home, clean up the yard, and repair or replace other structures like a shed or garage.
For example, if the home gets destroyed by a tornado, the homeowner’s insurance will pay to replace it.
In addition to the home itself, this type of insurance will cover the cost to replace belongings.
Items like furniture, appliances, and decorative accents can be replaced after your claim is filed.
Keep in mind that you may have to pay an additional premium to cover high-end or luxury items like diamond jewelry, antiques, or fine art.
Finally, your homeowner’s insurance policy should also include some form of liability coverage.
If someone gets hurt on your property, this coverage will help to pay for their medical expenses and protect you from a possible lawsuit.
Read your policy carefully to be sure you’re getting the coverage you need for the home itself, your belongings, and your level of liability.
An insurance agent can walk you through the details to make sure you have what you need.
Types of Homeowner’s Insurance: Versatile or Simple?
You might be surprised at just how many types of homeowners insurance policies are out there.
Most people choose what’s known as a “versatile” policy.
For the versatile policy, also known as HO-3 insurance, it covers everything included in a simple plan in addition to what’s called “unnamed perils.”
If your home has no specific coverage for flooding, you’re still safe with an HO-3 policy.
This type of policy is the most common for many homeowners since it offers a wide range of coverage that applies to most people.
It will also cover structures like a garage that are attached to the home.
The HO-3 policy includes liability protection and your belongings, too.
This plan is fairly affordable, which is why it’s such a popular option for many homeowners.
A “simple” or HO-1 policy is less expensive and much more basic.
It only protects your home against specific, named perils. Some of the most common perils it covers include theft, hail damage, and vandalism.
This basic policy is inexpensive, but if you live in a region that’s prone to hurricanes or flooding, you may want to consider getting something more comprehensive.
Even though it will cost more upfront, higher levels of coverage give you peace of mind and better protection in the event that an emergency strikes.
Broad and Comprehensive Coverage
For a bit more protection, consider an HO-2 plan.
This plan covers everything mentioned in the simple HO-1 plan along with protection from things like water damage, electrical damage, and freezing.
An HO-1 plan also covers against damage from falling objects such as a tree limb.
In general, this plan only covers items that are specifically named in the policy.
Read it carefully to make sure it offers exactly what you need.
For a bit more protection, the comprehensive or HO-5 policy is best.
This plan covers everything mentioned along with better limits for your belongings.
In other words, you’ll likely get more money to replace your stuff when you file a claim if you have this policy.
For an HO-5 plan, you will also get personal liability coverage although it may cost a bit more.
Flood, mold, and settling are still not covered under this plan.
You may want to consider getting supplement homeowner’s insurance for specific things that aren’t covered in a comprehensive plan.
What Else You Need to Know
Being put out of your home is not only an inconvenience, but it can also be an extremely stressful event.
With a quality homeowner’s insurance policy, you should be covered for additional things like hotel stays and money for food.
Most plans will pay for you to stay in a hotel while your home is being repaired or replaced.
This is an extremely important benefit since shelling out money for temporary housing can be quite expensive.
Supplemental insurance is recommended for things like identity theft or damage caused by water backup.
And while the different types of homeowner’s insurance cover the big things, it’s important to confirm that you’re also covered for the little things.
Shop around and get a quote to make sure you get the best price on premiums, deductibles, and coverage limits.
Protect Your Home with Insurance
Whether you live in an area prone to hurricanes or worry about flooding, it’s important to know the different types of homeowner’s insurance that are available to you.
These policies will give you the protection you need to repair and rebuild as you need to.
Make sure you talk with an experienced insurance agent to find out more details so you know exactly what you’re getting before you enroll in a policy.
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