Homeowner's Insurance Policy
Definition of "Homeowner's insurance policy"
Homeowner’s insurance is a kind of property insurance that covers risks commonly encountered by homeowners.
There are several kinds of homeowner’s insurance policies:
Homeowners-1 (HO-1) - the most basic coverage. Basically, HO-1 provides homeowners protection against catastrophic losses only. HO-1 is a Named Peril Policy, that is; a policy that specifies exactly what it covers.
Homeowners-2 (HO-2) - known as a mid-range policy, the HO-2 provides broader coverage than the HO-1, but it’s not as robust as the HO-3, for instance. It is also a named peril policy.
Homeowners-3 (HO-3) - is the most common homeowner’s policy in the US. The HO-3 is midway between a named perils policy and an open perils policy. That is because under the HO-3, your personal properties (appliances, furniture, cars…) are insured via named perils but the house itself is insured under an Open Peril Policy, which is a list of exclusions of damages insured by the policy. If it’s not on the list, the insurance will cover it.
Homeowners-4 (HO-4) - also known as renter’s insurance, the HO-4 is a policy made for people renting a property.
Homeowners-5 (HO-5) - the HO-5 is one of the most comprehensive homeowner's insurance available. An elite policy, the HO-5 is an upgraded version of HO-3, as it also includes the personal properties under the open perils policy and not just the house.
Homeowners-6 (HO-6) - the HO-6 is for people renting condos and townhomes. Also known as the condo insurance or the townhome insurance, the HO-6 is similar to the HO-4 in scope, but it deviates from it regarding the way some aspects are calculated.
Homeowners-8 (HO-8) - the HO-8 is designed to protect older homes and remodeled buildings that are difficult to replace if destroyed. It is similar to HO-1 as it is also a basic coverage, but the HO-1 usually evaluates the house via replacement cost approach, whereas it’s difficult to do that with HO-8, which typically uses the actual cash value.
Real Estate Advice:
Search our Glossary Terms for the specific definitions of all the types of homeowner's insurance.
And find a real estate agent to help you decide which type of homeowner's insurance is the best for you.
Popular Real Estate Terms
Unsecured long-term debt. There is no collateral or lien on the property. A debenture can only be issued by a financially sound borrower with an excellent credit rating because no ...
Surveying the land to determine its suitability for a specific purpose, such as building a high-rise apartment house. ...
Interest computations based only on the original principal. For example, the simple interest on a $100,000, 8% loan is $8,000. It is compared with compound interest which is applied to the ...
List of business property. ...
Wondering what “de facto” means? Well, because it’s a Latin word, let’s give a formal definition. De facto is Latin for indeed, in fact, in reality, actually. An ...
Court or government regulatory order to stop doing something, such as not showing minorities certain neighborhoods. ...
Literature, samples, equipment, tools, and other useful information that real estate brokers or agents can use for demonstration purposes to prospective buyers. ...
The selling of a parcel of land whereby the original owner agrees to immediately leaseback the property. The advantage of the land sale-leaseback in that the original property owner can ...
Before getting a loan to buy a property, you must know the definition of foreclosure. A foreclosure is the process of making a loan due immediately. Technically, a loan becomes due way ...
Have a question or comment?
We're here to help.