Over 6% of homeowners with various types of home insurance make one claim per year. The average payout for those claims is almost $14,000 and can go up to $16,500.
Now imagine you’re part of the 5% of homeowners without home insurance. The $14,000 claim you won’t get could’ve repaired your damaged home. Instead, you’ll have to dip into your savings account to save your home.
Spare your retirement fund and invest in a home insurance policy. There are 8 types of home insurance to choose from.
Do a little research before settling on a policy. This guide will help you find a home insurance policy that is perfect for your needs.
Basic Types of Home Insurance
The most basic form of home insurance is an HO-1 policy. The policy covers damage to your home’s structure and nothing else. If your home suffered a fire, this policy wouldn’t include your furniture in the claim.
The HO-1 policy covers your home in cases of:
- Theft or vandalism
- Damage from vehicles or aircraft
Outside of these named perils, an HO-1 policy won’t cover the damages to your home. A similar named-peril policy, HO-2, includes basic coverage for your personal belongings. Homeowners shy away from these policies because they have no liability coverage.
Common Home Insurance Policies
To take out a mortgage, the lender often requires a full-coverage HO-3 policy. It gives you home, property, and liability coverage. An HO-3 policy also provides medical and living expenses payments.
Unlike basic types of home insurance, an HO-3 policy covers all disasters. In your region, insurance companies may have a list of exceptions. An HO-3 personal property policy is named-peril, though.
The HO-4 policy provides coverage for any rental property. They are personal property and liability policies, for the most part. Your insurance company may cover living expenses if you need a temporary home.
Home Insurance With the Most Coverage
When you’re choosing home insurance to cover your expensive items, pick an HO-5 policy. Homeowners insuring valuable property need the higher limits of this policy. Both the home insurance and personal property policies are open peril.
Common HO-5 exceptions include:
- Vandalism of long-term vacant property
- Water damage from sewer or flood
- Pest infestation
HO-5 policies aren’t offered by every insurance company. You may need to contact a few insurers to find one.
Specialized Types of Home Insurance Policies
Condo owners need an HO-6 home insurance policy. This named-peril policy covers personal items, liability, and living expenses. Your condo will be safe from common perils like fire, explosions, and theft.
Protect non-traditional homes like RVs and trailers with an HO-7 insurance policy. The policy carries open peril coverage for the home’s exterior. Personal items fall under a named-peril policy.
The HO-8 policy provides coverage for historic or unique homes. It’s a full-coverage named-peril policy that includes medical payments.
Choose the Right Home Insurance Policy to Protect Your Home
Your home protects you from the outside world every day. The least you can do is return the favor and get home insurance. This way if disaster strikes, you won’t spend a fortune to fix it.
The types of home insurance available make policies available to all homeowners. Don’t let the possible policy cost scare you.
Need more insurance advice? Visit our Insurance section for helpful tips.