The biggest investment most people make in their lifetime is the purchase of a home. Homes come in all shapes and sizes: condominiums, co-ops, century old landmarks and newly built structures. Whether you own or rent, a home is a major investment, both financially and emotionally. If something disastrous should happen, you'd want insurance protection that is broad enough to help you repair or rebuild your home and replace its belongings. That is why it is important to make sure that you are properly insured to protect that sizeable asset.Homeowner's insurance provides protection for an owner-occupied property and includes coverage for the dwelling, other structures, personal property (i.e. furniture, clothing, appliances, etc), and loss of use if a covered loss occurs and you need to find temporary housing while repairs are being made to your home. This coverage can be written to include guaranteed replacement cost on both the building and contents. The property portion of this policy is subject to a deductible per loss.A homeowner’s policy also provides personal liability coverage if you are sued for a negligent act, or if someone hurts themselves on your property. The liability component also extends well beyond the boundaries of your home. Should you be found legally at fault for injury or loss to another individual, whether you unfortunately caused a tumble down a flight of stairs or a fall in the garage, that is the personal liability portion of your policy that will respond.
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Categories of homeowner's insurance are designated by "HO" numbers. This simply stands for homeowner. Here is a short list of what the various numbers cover:
HO-1: This was the original standard. HO-1 only covers 11 specific types of damage (vehicles, smoke, vandalism, fire or lightning, explosion, riot, aircraft, windstorm or hail, damage by glass/safety glass, theft, and volcanic eruption). Due to its limited nature, HO-1 is not very popular anymore, and has been phased out in many states.
HO-2: HO-2 tends to cost more, but it covers more things including 17 specific dangers. The additional coverage includes damage from water or freezing (pipes/plumbing) on top of the HO-1 items.
HO-3: HO-3 is different from the previous two in that it covers everything except specific dangers. For example, floods usually aren't included (although, you can get separate flood insurance through the government). Your policy will state exactly what isn't covered (this varies depending on which company you go with). HO-3 is more costly than HO-1, but the coverage is more thorough.
HO-4 and HO-6: don't cover buildings, only property, and most have some liability coverage. These homeowners insurance policies are meant for renters and condo owners.
HO-5: is the most comprehensive insurance policy. It runs about 15% more than HO-3. It includes extras that might be unavailable from other policies (i.e. coverage for jewelry, art, antiques, etc.) HO-5 can also include coverage for building code upgrades and sewer backups. By bundling all the extras in one policy, it ends up much cheaper than buying a less expensive policy and adding on all the upgrades.
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