Home owners insurance is important, not only to protect the home owner from the enormous costs that he could incur as a property owner in the event that disaster strikes, but also in order to get a loan and a mortgage from a bank in the first place, a home insurance policy is necessary. There are several types of home insurance policies commonly available that address specific needs for the particular structure in question.
Although in the past, separate policies were needed to cover the different damages a home could incur and the various costs accrued from that damage, modern home insurance policies are fairly broad in their scope and depth. In the United States, a policy type known as HO-3 is the most commonly purchased policy for a homeowner. It is designed to protect the owner from losses that could result from damage to all aspects of the home, structure and its contents as well as any liability that may arise from daily use. This also includes any visitors who may end up having an accident or suffer some sort of injury on the premises. A similar policy, less common than HO-3, is HO-5, which tends to cover a wider range of possible occurrences and losses that could accumulate as a result. Other, less common home owner’s policies include HO-1 and HO-2. These are both limited home insurance policies, meaning that they are not intended to cover all the possible damages, but rather to cover only very clearly defined and particular damages usually having to do with some special concern of the owner. The former, HO- 1, is aimed to protect specific valuable property, such as jewelry, antiques, or art work, and the degree of coverage and cost of the policy are entirely dependent upon the value of the objects to be insured. The latter policy, HO-2 is aimed to cover the owner from losses from damages to specific parts of the home as outlined by the policy. This is often known as a “named perils” type of policy, and is usually used only in cases where some specific feature is more likely to be damaged, such as antique external architecture or when a specific damage is likely to occur.
Lastly, HO-8, usually called “older home” insurance is designed specifically for antique homes or homes that have been lived in for more than a quarter century. It could also cover homes that are much older than the other homes in the neighborhood. Essentially, this type of policy allows a home owner whose house has higher replacement cost than the market value, insure the structure at the lower market value rate. This is common in old parts of cities where new developments have raised the cost of property but not the structures built there on.
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