UPDATED: Mar 13, 2020
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Understanding Homeowners Insurance Forms
Often in the insurance industry, homeowners insurance policies are also referred to as “forms”. Not to be confused with katas from your childhood karate class, these different forms outline exactly what your policy covers, and the dollar amounts of coverage you can request. As you will see below, the most popular type of homeowners insurance form is the HO-3. It provides the most comprehensive coverage for what you pay in annual premiums. But there are other HO forms you might want to consider while you are shopping around for the right homeowners insurance policy.
An HO-1 form is just about as basic as you can get when it comes to home insurance. In some ways, you can almost compare it to Liability insurance for automobiles. The HO-1 form policy only covers damages which occur to your dwelling. If your personal property is damaged, or if your external structures sustain damage, you cannot file a claim with your insurance company. Furthermore, unlike an HO-3 form, your dwelling coverage will only pay out claims if your dwelling is damaged by one of the 11 named perils on your policy. Any other repairs or replacements will be paid out of pocket by you, the homeowner. In some states, you’ll have to ask your insurance agent if HO-1 forms are even available, seeing as how many states have discontinued such policies.
The HO-2 policy expands upon the coverage of an HO-1 in a few different ways. For starters, it adds two additional perils to the list of damages which your provider will pay out claims on: damage from falling objects, and and water damage caused by plumbing, household appliances, and heating or A/C units. Furthermore, HO-2 policies also offer coverage for your personal belongings. However, all coverage on your HO-2 policy will be limited to the named perils list as determined by your insurance provider. But if you ask your agent, you may have the option to add coverage with endorsements or riders.
HO-3 policies are the most popular by far, and for good reason. For starters, your dwelling coverage isn’t limited to a finite list of named perils. In a way, it’s the exact opposite: your insurance company will pay out on any claim for damages to your dwelling, with the exception of a short list of excluded perils. Unfortunately, some of those perils can be very damaging, like floods or earthquakes. So be sure to ask your agent about what, if any, options you have when it comes to protecting yourself against excluded perils.
|Home Value||HO-3 Form (Annual Premiums)|
HO-3 policies also cover your personal property and provide liability coverage, as well as medical payments, for any accidents which may happen on your property. You might also have the option to insure external structures (such as detached garage or a shed) from any damages they may face. The HO-3 gives you the greatest number of options – which means it can also be more confusing and overwhelming – than any other policy. That’s why it’s so important to make sure you have a thorough discussion with your agent about what your policy includes, what it doesn’t, and how to get the best coverage for your money.
You could almost say that the HO-3 form and the HO-5 form policies are are like fraternal twins. The policies are extremely similar, but there are specific differences which set them apart. The biggest and most obvious of which is the personal property coverage. On the HO-5, your personal property is protected against damages in the same way that your dwelling is: open peril. This means that you can file a claim on anything which damages your personal belongings, with the exception of the excluded perils listed on your insurance policy. But keep in mind that this extra coverage will cost you much more in premiums each year.
|Home Value||HO-3 Form (Annual Premiums)||HO-5 Form (Annual Premiums)|