Home insurance policies explained

Home insurance policies explained


Once you have decided on getting insurance as a homeowner, you may want to know there are different types of policy, so be prepared in the eyes of the insurer. Understanding a few things in advance will turn to be useful, as when you have documents under your hands you may fall short of patience, and lastly put your signature on unwanted clauses and declarations.

Each policy type has an acronym: H01, H02, and so on. Homeowners typically buy an H03 since it is considered the most versatile, but this is just a statistical fact; it is not necessarily the best option for your specific situation. Now let’s consider what is available in the U.S. marketplace.


H01- The basic homeowners’ policy


You may choose basic protection when you want your home to be covered as a dwelling, plus the belongings that are in, and every structure that lies on its land as a whole, from damage caused by the following categories of perils: fire and thunders, windstorm and hail, vandalism/ malicious mischief, vehicles including a plane crash, bursts and tumults, glass breakage, smoke, volcanic eruptions; personal liability, theft.

The indemnification is in most cases on replacement cost value, instead of the more traditional actual cash value. That will take care of rebuying materials at their most recent price. However, be careful to ask the insurer about this. Like the other policies, H01 doesn’t cover earthquakes and floods, for which you will have to buy separate, dedicated insurance.


H0A- Homeowners Association Insurance


If your house makes part, as a building, of a community of residents who share spaces and are engaged in plans and projects to optimize the quality of life for the members, then there will be a legally regulated belonging to that community: you pay fees related to the services, such as maintenance of the building, elevator, common areas as gardens, etc. (with slight differences versus a condo). Being this the case, you will be likely eligible to get the HOA policy.

These policies can be a lot different, depending on the association rules.

They typically cover your home the same as H01 does, but only the actual cash value (ACV) is considered for reimbursement. The premium of this policy is the lowest, but the payouts may not fully cover your eventual losses; the insurance also applies to liability coverage for facts occurring in the range of common property areas.


H02- Broad form homeowners policy


This is an extended form of H01, in fact, it protects you against even more perils: falling objects (i.e.trees), smashing ice (snow, heavy rain), dumping/flooding of water, steam saturation, acute ransacking/breaking/burning, freezing, acute damage from electricity. Among these categories, may also be intended the coverage from temperature-regulating appliances, such as air conditioners, but doesn’t include kitchen or laundry items. Eventually, HO2 comes with both a replacement cost and ACV as regards the payouts.


H03- ‘Special form’ homeowners insurance


H03 goes beyond the levels of protection offered by H01 and H02, it is complete and the most bought: it covers the building of your home from all main perils (open perils), except a few specific ones; instead, the contents within are protected by a named perils coverage apart. What is excluded: earthquake-like phenomenons, breaching of law forces, water damage (i.e. flood), electrical failure, lack of care, acts of war, vandalism while vacant (after sixty days), mold, mechanical breakdown, dispersal of pollutants, shrinking, settling of animals, pets and some others (always ask the insurer).

You will have a list of what is specifically covered. Before subscribing, remember to read carefully the papers. H03 usually also offers the replacement cost or ACV options.


H04- Renters insurance


While landlords have to worry about insuring the house they rent, tenants must have care of their personal properties: this policy form indemnifies for items being damaged, destroyed, or stolen. Tenants, of course, are also exposed to liability issues and should insure themselves for causing harm to other people inside the rented house (while being valid for an outside-home accident); loss of use also applies for renters.


H05- ‘Premier’ homeowners’ policy


With H05, a slight but important difference comes up: you have everything of H03 but the perils spectrum coverage applies also to the contents within the structure of your home, including furniture, appliances, and clothes (that on H03 required a distinct coverage). Alias said, your belongings, as well as the building, are protected under an ‘open perils‘ basis, instead of being limited to some events, so home and its contents are at the same time covered for virtually every cause of loss. Again, earthquakes and floods are the only exceptions. Payouts are typically on replacement costs. H05 may not be applied to houses older than 30 years or refurbished later.


H06- Condo policy


In the context of a condo, your house is considered as a unit of a complex of buildings. H06 covers the house building (walls, floors, ceilings), as well as your personal belongings with the same level of protection as the H02. What is outside the unit, like a box or mini-garden may not be included. A condominium policy is comprehensive of additional living expenses (ALE) and liability coverage so that if someone was injured within the unit you will be indemnified for his/her medical expenses and the legal costs of yours.


H07- Mobile home insurance


Houses that don’t stay on a land face mostly some kind of risks, that’s why don’t qualify for policies other than this. Perils from which they are covered are wind-related events, hail, lightning, fire, explosions, a flood from bursting pipes, weight of ice, falling objects, theft, vandalism, animals attack (some may not be included depending on the insurance company). Both the mobile unit and belongings inside are protected; there are also liability and loss of use coverage. A typical add-on may be the trip collision coverage, which acts like car insurance.


H08- Older houses policy


An older house is under a whole different profile of risk, hence this specific policy is needed. Your home as a building is protected by open perils, so you have a wide coverage; the contents only by named perils.


Still uncertain? Let’s recap:


– When you have a standard single-family modern house, want to stay protected against the most common major and minor events, you have a relatively low budget then H01 or H02 might be just good options.

– Your home being the same as above mentioned, but you want peace of mind about all perils, a more specific control on your properties, and your income is substantial, then, by all means, choose an H03.

– You want even more overall coverage and in pretty good financial shape: H05 is for you.

– You live in a condo: the obvious choice is H06.

– If you own an old house, or you haven’t the requirements for a standard H03, your best option will be H08.

Regardless of the type, every policy is stipulated as a term contract, thus it will be actual for the chosen period. Understand your needs and good luck about not ever being in those needs!