What is Homeowner’s Insurance?

Homeowners insurance is a form of personal lines insurance. The typical homeowner’s policy has two main sections:

1. Covers the property of the insured and
2. Provides personal liability coverage to the insured

​There are different types of homeowner’s policies depending on what type of coverage is necessary. The types are divided based on what perils (or causes of loss) they cover. The types are numbered 1-6 and 8.

An HO-2 policy will have less coverage than an HO-3 policy because the HO-3 is an open-peril policy. An open-peril policy means that the coverage for the house and other structures is covered for any peril except those that are specifically excluded in the terms. On the other hand, an HO-2 is a named peril policy which means that only the named causes of loss are covered and nothing else.

Another type of homeowner’s policy is a renter’s policy or sometimes called an HO-4. This type of policy only covers the personal property and the liability for a renter. Since they do not own the building they live in, they do not need to insurance it. There are many myths that renter’s believe, such as that if your landlord has insurance that you don’t need any coverage. WRONG. The landlord may have insurance but they are only responsible for the building you are renting, not the personal items you bring into the building. With your own renter’s policy you will have coverage for all your stuff and any liability you might have.
An HO-5 policy is different because with these policies you can cover both your structures and your personal property on an open-peril basis unlike the HO-2 and 3. The difference is that with HO-2 and HO-3 the coverage for personal property is limited to only named perils.

Condominium owners have their own special policy called an HO-6. This policy coverage will include parts of the building, but not the whole building like a regular homeowner. This is because many condo owners are part of an association and have to follow an agreement between the association and the owner-occupant of the condo. Some coverages in these policies include: alterations, appliances, and improvements that are part of the building within the residence, property that is the insureds responsibility under the association agreement, and of course the personal property of the insured.