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
The assessment sales ratio is a way of measuring the accuracy of a property’s assessed value when compared to the property’s selling price. This measurement gives the ...
Contractual provision allowing an individual or business to renege on a commitment in certain cases without being penalized. ...
A married partner. Property may be jointly held by spouses. ...
High quality, premium wood to be used in construction such as for home building. ...
If escrow is the legal “moment” where assets are held by a third party (an escrow agent) hired by both the buyer and the seller of goods like real estate and insurance until the ...
Sale that is finalized only in the case of a particular occurrence or eventuality. ...
Revocation comes from the verb "to revoke", which means to take back the validity of something. The definition of revocation is detrimental to contract law. It gives the person making the ...
Governmental body having the responsibility for planning the future development of a jurisdictional area. A planning commission is responsible for developing and managing a zoning ordinance ...
Present worth of the property which is different than the price paid for it or its book value (cost less accumulated depreciation). The current value may be determined through appraisal. ...
Have a question or comment?
We're here to help.