The HO-3, also known as a special form, is the most common home insurance policy form, according to the National Association of Insurance Commissioners. An HO-3 offers open risk coverage for the structure of your home. Find cheap home insurance quotes in your area Homeowners insurance is a valuable policy option that provides coverage not only for the home, but also for its contents and the homeowner's liability. Approximately 85% of homeowners have homeowners insurance policies, according to data from the National Association of Insurance Commissioners (NAIC), 79.09% of which are HO-3 policies.
The HO-1 and HO-2 policies are called risk policies, meaning that they only cover damage caused by a hazard specifically mentioned in the policy, such as theft. HO-3 and HO-5 policies, on the other hand, are open risk policies, since they cover any cause of damage to the structure of your home, except those specifically excluded in the policy. HO-8 policies are generally limited to older, higher-value homes. The most common causes of home insurance claims, according to an analysis by Travelers Insurance policyholders, are wind, non-meteorological water damage, hail, water damage.
In total, these five causes account for 77% of all homeowners insurance claims. The Office of Insurance Services (ISO) found that 98.1% of insurance losses for homeowners are due to property damage. Like travelers, wind and hail damage accounted for 34.4% of home insurance losses, according to the analysis. The balance of non-material damage losses comes from liability cases, such as personal injury, medical payments, and credit card claims.
Digging deeper into the numbers, we can analyze what usually causes property damage. Theft accounted for just 1% of homeowners insurance losses. When we look at which possessions are most frequently mentioned in homeowner claims, Enservio's data shows that jewelry tops the list. Electronic products and clothing are also common subjects of claims involving damage or theft.
Depending on where you live and the type of policy you have, some of these hazards may not be included. For example, in hurricane-prone states, such as Florida and Texas, you may need to purchase separate wind and hail insurance coverage. The HO-3 policy provides adequate coverage for most homeowners and is the most common type of home insurance policy. It covers your home and belongings and includes liability coverage, third-party medical payments and additional living expenses.
Much less popular are HO-1 and HO-2 homeowners insurance, which only pay for damage caused by the events listed in the policy. When you imagine the type of property that needs home insurance, a single-family home in the suburbs may come to mind, but there are actually eight types or forms of policies for different types of properties and coverage needs. If your home is destroyed, your homeowners insurance company isn't likely to simply write you a check for the amount listed on your policy. To better understand how different types of home insurance work, it's important to know how they're set up.
Homeowners insurance pays if an event covered by your policy damages or destroys your home or belongings. This type of home insurance is the most comprehensive option available and covers your home, personal belongings, civil liability, additional living expenses and other people's medical payments. Insurance generally covers damage caused by a sudden and accidental event, such as hail or wind, but does not cover simple wear and tear. With a homeowners policy, you can generally choose between replacement cost coverage and coverage with real cash value.
You want the coverage that best suits your living situation, and there are policies designed to insure different types of homes. Like HO-3 policies, renters insurance also covers your liability (also known as legal expenses) and your additional living expenses if your apartment is damaged and you need to live somewhere else temporarily. As it sounds, coverage for other structures provides insurance for structures on your property that are not attached to your home. Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance.
It's a good idea to compare several insurers to make sure you're getting the best deal. Policygenius agents can help you compare different insurers at once. Keep in mind that home insurance is not the same as mortgage insurance, which you may have to buy if you spend less than 20% off your home loan. Coverage for other structures is generally set at 10% of the home's housing coverage, but the amount varies by insurer.
Like an HO-1 policy, HO-2 insurance is a policy with a hazard name that covers your home and personal effects under the same circumstances covered by an HO-1 policy. . .