What Type of Homeowners Insurance Should You Purchase?

Throughout the year I schedule different items for review. I, like most of you have insurance coverage for my home, health, life and car. Some of you may have renters insurance, or others may own a boat or motorcycle, or other objects that require insurance. I reviewed my home owners policy recently and thought that I would pass along some information. I did not know that there were codes that were associated with differing policies. I found out recently that I had an HO-3 Policy. I had no idea what that meant so I did a little bit of digging and found that if I didn't know about the differences, others may not know either.

I have an HO-3 the most common of the insurances available to homeowners. The HO-3 provides broad coverage for direct losses due to fire, lightning, tornadoes, wind storms, hail, explosions, smoke, vandalism and theft . I would suggest that you look at the dollar limits of insurance that is contained in your policy, if you feel comfortable with the amount of insurance you have for specific items then do nothing, if you feel that your insurance will not cover your losses, check with your agent about increasing the value. By increasing the value of your proposed loss, then remember that your premium will raise.

The standard policy, which I have, provides $1,000 for theft of jewelry. If you have jewelry that is worth a lot more, consider purchasing higher limits, you can purchase floaters to your policy to cover specific pieces of jewelry. Floaters may also be applied to other expensive possessions such as paintings, electronic equipment, stamp collections or silverware. The insurance company normally provides coverage for what it would cost to replace a home not what the current value of the home is. My insurance company provides a generous twenty percent over the replacement value of my home.

If you live in an area that is frequently hit by major storms, ask your agent about an extended or guaranteed replacement cost policy. This will provide a certain amount over the policy limit to rebuild your home so that if building costs go up unexpectedly like they did with Katrina, due to high demand for contractors and materials, you will have extra funds to cover the bill.

If you live in an area that is prone to flood damage, ask your agent for additional coverage. The policy that I have covers for accidental discharge of water from a plumbing system. However water seepage is excluded under the HO-3, seepage, according to my agent is viewed as a maintenance issue and is not covered, so get your basement waterproofed.

I had a son who was a full time college student, as part of my household, my insurance policy provided some coverage in the dorm for around 10% of the contents, however if he lived off campus and had his own apartment my homeowners insurance would not cover him. This is important for those of you who are looking to send your child off to college.

When I was looking at my home owners insurance I found that there were different grades or levels that were available and I have provided a list below to guide you. For further information on this please see http://www.financegenius.com/index2.php?option=com_content&do_pdf=1&id=32

HO-1 - basic home insurance, it is very limited and the covered items are stated in the policy. HO-1 is the least common policy and covers items due to things like fire, and robbery.

HO-2 also known as broad home insurance, is similar to HO-1 but has a little more coverage including damages resulting from falling objects and ice. Higher premiums

HO-3 standard homeowners & renters insurance, this is the most common policy. Under this insurance plan, damages from most natural causes with the exception of earthquakes and floods are covered. This is a very thorough policy; depending on the exact specifications, it can even cover liabilities of people who may become injured on your property. Expect to pay more for this policy.

HO-4 renters insurance includes many things like liability coverage for people harmed or injured on or around the property, robbery, and hail.

HO-5 the extensive homeowner insurance and is very similar to HO-3 except it is more thorough and covers a wider range of losses. Again a much higher premium

HO-6 A policy for condominium owners. These differ from other policies because the land is shared amongst other condo owners. Actually, it is the land owner association that covers the shared property; this usually includes the condos structure. This policy includes liability insurance for those in and around the property as well as damages from fire and water, and valuables lost to theft.

HO-8 This type of policy is for older homes. Since most of these homes cost more to fix than they are worth, this coverage allows homeowners to repair the damages at the lower value.

hope this helps