How to Choose Your Home Insurance
Depending on your living situation, the appropriate type and level of home insurance can vary widely. This guide will help you understand your options, so that you can make the most economical and effective decisions when purchasing home insurance.
Types of Home Insurance
HO 1 – This is the most limited and economical plan, which covers damages against fire and lightning only.
HO 2 – Also known as “broad coverage”, HO 2 expands HO 1 to cover collapses, glass breaks, hail, plumbing issues related to heat/cold, air conditioning, smoke damage, storms, theft, vandalism, objects falling from the sky, and social disturbances like riots. If your property is in danger, HO 2 will pay to remove it from the area to safety.
HO 3 – This is the most popular policy, and it covers everything except what is specifically excluded from the policy.
HO 4 – Functionally the same as HO 2 except for renters and tenants, with the addition of doctors' bills and living expenses.
HO 6 – Condominium owners will use an HO 6 policy, which generally covers what is not already covered by the insurance policy governing the entire condominium complex. It also includes liability insurance to protect you in case someone (like an adjacent resident) tries to sue you.
HO 8 – Designed specifically for older homes, HO 8 is different in that it typically does have a rebuild policy. You may be able to get a modified rebuild policy using more up-to-date materials, however.
What's Right For You
When assessing your options, it's most important to think about which types of coverage are applicable to you, and which potential threats are worth the extra money. For example, if you have a second home with little or no furniture or items of value, you may not need coverage for property on or in the building. What are the most likely risks to your building? If fire and lightning really appear to be the most common, you may be able to get away with HO 1 for a second home. However, your primary home will contain a lot of items of value, all of which stand to be destroyed if the home is seriously damaged, so you probably want to opt for the highest level of coverage you can afford. After all, you're protecting almost all of your major belongings (with the exception of vehicles like cars and boats, which usually aren't covered by home insurance).