Buying a house will likely be the most significant investment you ever make, which means home insurance is essential to your financial stability. However, to ensure you’re adequately protected, you must understand the structure of your policy and what it’s designed to cover. There are a variety of options available to accommodate different kinds of construction and each property owner’s unique needs. Below, learn the most common types of policies so you can make an informed decision on which is suitable for you.
What Are the Various Kinds of Home Insurance Available?
This is a basic policy intended to provide coverage for single-family homes and the contents inside at their actual cash value. It includes damage caused by events like fire, hail, vandalism, theft, windstorms, falling objects, and civil unrest. HO-1 home insurance is usually the most affordable since it offers minimal financial security.
An HO-2 policy is a broader form of coverage. In addition to the situations named in an HO-1 policy, it also covers claims related to volcanic eruptions, plumbing mishaps, damage incurred from the weight of snow or ice, and accidental problems associated with a water heater or HVAC system. With this option, your home will be protected at its replacement cost, which doesn’t factor in depreciation.
For most homeowners, an HO-3 policy is recommended. This will cover the main residence and all the possessions inside, as well as other structures on the property, such as a detached garage or shed. It offers protection against any losses that take place unless they occur due to specific events excluded in the policy, like flooding and earthquakes. Liability coverage is also included to cover the cost of losses that result from a third-party injury or damage you cause to someone else’s property.
Referred to as comprehensive home insurance, HO-5 policies cover a dwelling in the same way as HO-3 policies, but they offer increased protection for personal property. With this coverage, the home and its contents are insured for their replacement cost against any peril not named as an exclusion. It also comes with higher policy limits for expensive items, including jewelry, artwork, and electronics.
An HO-8 policy is designed for homeowners living in an older home construction. Usually, these are houses that were built more than 40 years ago and contain materials that are no longer deemed safe. This prevents them from qualifying for HO-3 coverage since there’s a higher risk of loss, and repairs are more expensive.
When you’re ready to purchase home insurance, you can trust the professionals at Southern Insurance Associates to lead you in the right direction. Based in Hixson, TN, they’re committed to providing clients throughout the area with personalized coverage solutions that offer maximum protection. For nearly two decades, this locally owned agency has delivered high-quality products supplied by a wide array of reputable carriers. Call (423) 296-0626 to request a free quote, or visit them online to learn more about their services.