Understanding Different Types of Homeowners Insurance Policies

Understanding the Different Types of Homeowners Insurance Policies

By Jesmany Jomarron, Esq.

Homeowners coverage provides financial protection against loss due to disasters, theft and accidents. Most standard policies include four essential types of coverage: Coverage for the structure of your home; Coverage for your personal belongings; Liability protection; and Coverage for Additional Living Expenses. Depending on your home and which insurer you choose, you may obtain one of several homeowners’ insurance packages to cover your home and personal property. Property claims are made when loss or damage occurs to your home or personal possessions. Property coverage helps pay for damage caused by covered perils to your home, the contents of your home and other personal belongings owned by you or family members who live with you. In some cases, it helps pay for damage to other structures, such as tool sheds, detached garages, small boats, guest houses and their contents. Your insurance agent or company can point out the items covered in a given policy. Most policies provide special limits to some personal property, such as cash, antiques, firearms, jewelry, furs and electronics. You may be able to add additional coverage for these items as an endorsement to your insurance policy for an additional premium.

The three policies offered most frequently to owner-occupied, single-family homeowners include the Broad Form HO-2,Special Form HO-3, and Modified Coverage Form HO-8. Each policy provides coverage against specified perils or events that cause damage to property. A broad form HO-2 policy is a type of home insurance that is written on a named-perils basis. This means it only covers damage to your property that’s caused by one of the perils listed on the policy. Most HO-2 policies cover damage due to fire or lightning, removal of property endangered by peril, windstorm or hail, vandalism or malicious mischief, theft, damage from vehicles and aircraft, explosion, riot or civil commotion, glass breakage and comprehensive liability. Special Form (HO-3)is the most popular and most comprehensive homeowners’ form of the three forms mentioned above. It covers the home for all causes of loss not specifically excluded or “all risks”. So, it’s very important to read the exclusions. The Modified Coverage Form HO-8is designed for older homes, this policy usually reimburses you for damage on an actual cash value basis which means replacement cost less depreciation. Full replacement cost policies may not be available for some older homes.

Jesmany Jomarron, Esq. writes:

“This limited coverage excludes many types of losses, including most caused by water. Claim payments are commonly made for actual cash value, which can result in significantly lower claims payouts. HO-8 policies may not meet the minimum insurance requirements of many mortgage holders. Confirm with your mortgage holder that the HO-8 policy meets your insurance requirements before purchasing”

Having Trouble with Your Homeowner’s Insurance? It’s important that you understand the terms of your homeowner’s insurance policy so that you know your rights and obligations under the policy. Contact one of the attorneys at Farrell, Patel, Jomarron & Lopez! We provide representation to clients facing a wide range of insurance claim issues. Call 305-300-3000 Today!