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Most homeowners are not familiar with the 8 types of homeowners insurance because they typically own just one type covering the home in which they live. However, some property owners have several types of property, each of which is insured. The alphabet of home insurance types is singular—HO—but there are 8 variations on the theme.
HO-1 is such basic coverage that most homeowners find it of no value. It covers a home against fire and lightning damage. That’s it. Nor does an HO-1 policy offer liability coverage. Needless to say, mortgage holders are not thrilled by such a rudimentary policy and require that homes they have a stake in be more fully covered than this.
HO-2 offers broader coverage, but only against named perils. It also offers liability coverage to protect against a visitor’s injuries. HO-3 is the most common type of insurance because it pays claims against damages caused by many more perils than the few named in an HO-2 policy, plus it protects homeowners against liability claims.
HO-4 is for renters of a home. It doesn’t cover the structure itself, but does insure against loss of contents, which is what a renter brings to the situation. It can insure against liability claims as well. HO-5 offers broader coverage against more perils than HO-3 offers for relatively little more premium. However, excellent credit is required to buy it.
HO-6 is for condo owners, insuring the part of a condominium complex owned by the policyholder. HO-7 is for mobile home owners and is an insurance product especially crafted for such homeowners. Finally, HO-8 is for owners of older homes, whose insurance premiums will reflect the lower market value of the home.
A home only needs one of these polices, though riders and umbrella coverages might be desired for fuller protection. Knowing the critical differences among these various types of insurance is one of the bases of knowledge that a reputable insurance agent brings to the table when a homeowner is looking for the insurance type that best fits his situation.
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