Homeowner’s insurance, also called hazard insurance, is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one’s home, its contents, loss of its use (aka. additional living expenses), or loss of other personal possessions of the homeowner. The standard homeowner’s insurance policy also includes liability insurance for accidents that may happen to a third party at the home or caused by the homeowner within the policy coverage territory. It requires that at least one of the named insureds occupies the home. There is also a dwelling policy which is similar, but used for residences which don’t qualify for various reasons, such as vacancy/non-occupied homes, seasonal or secondary residence or possibly age of the dwelling.
The cost of homeowner’s insurance often depends on what it would cost to replace the home as well as any additional coverages (or riders) that are added to the policy. Typically, certain “perils” are excluded from a standard homeowner’s insurance policy like claims due to floods or war and other standard exclusions (like termites). Special insurance can be purchased for these possibilities, including flood insurance. The amount of insurance on the dwelling is typically adjusted at renewal by applying an inflation factor into the replacement cost. This helps to ensure that the home always has enough dwelling coverage to replace the home in the event of a total loss. It is recommended, however, that you periodically review this figure with your agent to be sure it is accurately reflecting the actual cost of replacement. Most insurers offer discounts based on factors that they know will reduce the possibility of a loss such as new homes, homes with fire and/or burglar alarms, homes located near fire stations, etc.
Most home buyers borrow money in the form of a mortgage loan and the mortgage lender always requires that the buyer purchase homeowner’s insurance as a condition of the loan. This is designed to protect the bank if the home were to be destroyed. Anyone with an insurable interest in the property should be listed on the policy.
Types of Policies
Currently, the ISO (Insurance Services Organization) has seven standardized homeowners insurance forms in general use:
HO1 – Basic Form Homeowner Policy
A basic policy form that provides coverage on a home and its contents (personal property) against 11 listed perils. The perils include fire or lightning, windstorm or hail, vandalism or malicious mischief, theft, damage from vehicles, damage from aircraft, explosion, riot or civil commotion, glass breakage, smoke and volcanic eruption.
HO2 – Broad Form Homeowner Policy
A more advanced form that provides dwelling and contents coverage against 17 listed perils, including all 11 on the HO1 plus falling objects, weight of ice, sleet or snow, electrical surge damage and three specific categories of water damage from home utilities or appliances. This is a “named perils” policy, which lists the perils that would be covered.
HO3 – Special Form Homeowner Policy
The typical, most common form used for single-family homes. This policy provides “open perils” coverage on the home with some perils excluded, such as earthquake and flood. Contents are covered on a named peril basis as in an HO2. “Open Peril” means that if it is not specifically excluded in the policy, it is covered.
HO4 – Renter’s Insurance
The “Tenants” form is for renters. It covers personal property against the same perils as the contents portion of the HO2 or HO3 up to a specified amount. It also provides the renter liability protection for accidents that may happen to a third party at the home or caused by the renter within the policy coverage territory.
HO5 – Comprehensive Homeowner Policy
This is the best way to protect your home and its contents and is recommended by most experts. On this policy the contents are covered on an “open peril” basis as well as the dwelling, therefore as long as the cause of loss is not specifically excluded in the policy it will be covered for both dwelling AND contents (personal property).
HO6 – Condominium Policy
This is the standard form for condominium owners.
HO8 – Homeowner’s Modified Form
The “Modified Coverage” form is for owner-occupied older homes whose replacement cost far exceeds the property’s market value. It provides for named perils coverage as in an HO2, except repairs and replacements are done on a cash value basis rather than a replacement cost basis.
At Lane Agency, you can purchase auto insurance, homeowners insurance, renters’ insurance, business insurance, motorcycle, boat and RV insurance, commercial auto insurance, and more. Very often, you can earn substantial discounts by combining multiple lines of insurance so don’t forget to ask about Multi-Policy Discounts!
One of our Primary goals at Lane Agency is to ensure that our agents address the gaps and hidden costs in our clients’ policies to confirm that their protection is truly comprehensive. We have many homeowner’s policies available from various companies, some of which offer added benefits of which most policyholders are unaware. Do you know if your insurance provides Identity Theft Protection? What about covering a hotel or the cost of meals if you are forced out of your home by a covered loss? Replacement Cost for your home or market value? Is your deductible sufficient that you are getting the lowest possible premium and still able to afford to cover your liability in the event of a loss? We answer these questions and MANY more when we do a completely free and comprehensive review of your current insurance policy. We are also able to show you a unique side-by-side comparison of your prior policy vs. what our companies have
Expect to be treated with respect and honesty when you choose Lane Agency. Whether speaking with an agent, a support representative or any other member of our team, we are all here to help you protect your most valuable assets now and into the future!