What type of home insurance do you ACTUALLY need?

In order to legally drive a car in the United States, you are required by law to be properly insured. The same is NOT true for homeowners insurance. It is not mandatory for you to insure your home or belongings if you live in a house, unless you borrowed money to purchase your home (many mortgage lenders require you to purchase insurance to protect their interests). Unfortunately, many people, even homeowners that are insured, never really understand their policies.

Do you know which one is best for you?

HO-3 – Special Form

This is the most common type of homeowners insurance. It’s also usually the minimum coverage requirement when you obtain a mortgage loan. With HO-3, your home is covered on an open perils basis and your belongings are covered on a named perils basis.

What exactly does this mean? A peril is a specific danger that could cause damage to your property. An open perils policy lists perils your homeowners insurance does not cover. Meaning, if your property is affected by something that is not on the list, your insurance has it covered. The opposite is true for your personal property. If something happens to one of your belongings that is not specifically named on the list, you are not covered.

HO-5 – Comprehensive Form

It covers more perils than any other policy, adds new coverage and expands existing coverages, such as a higher limit for jewelry items and business personal property. Under the HO-5, there is no requirement to prove that your personal property claim happened due to one of the named perils listed on your policy. However, it does come at a price. You will pay more for an HO-5 policy and the underwriting guidelines can be a little more restrictive.

Generally, HO5 coverage is limited to newer and/or well cared for homes that are in areas protected by a fire department.

HO-6 – Condo Form

Condo form is home insurance for the owners of co-ops or condominiums. Considering homeowners associations (HOAs) typically provide insurance that covers the outside of the dwelling, HO-6 provides personal property coverage, liability coverage and specific coverage of improvements to the owner’s unit. It’s also important to note that although your association may provide some coverage, it does not include your belongings or provide you with personal liability coverage. Why would you leave your coverage to chance? This is why Condo Form is important to have.

Although these are not the only homeowner insurance policies we offer, it’s a good start. If you still have any questions or concerns, feel free to contact me at lgarcia@vanbeurden.com. Let’s work together to find the policy that best suits your needs.