8 Types of Homeowners Insurance
Our homes are our most valuable possessions, and we all seek to protect it, and safeguard it, from every possible unforeseen threat that may lead to its damage. Moreover, we also need to ensure that our beloved family members, and every valuable belonging within our home, stays safe and secured everytime. To pertain to this issue, we needi to purchase a homeowners insurance policy.
Homeowners insurance policy is one of the most essential purchases that you can make to secure your home, and by extension, your family from all the forms of unexpected expenses that you might otherwise need to cover yourself.
In this context, we will take a look at the 8 different types of insurance policies for homeowners that you should be aware of in India.
What are the 8 different types of insurance policies for home owners in India?
To cater to different types of needs, and coverage of valuables, there are 8 different types of insurance policies for homeowners in India.
In this article, we will take a look at each one of them to understand which one is the best fit for your home, and comes under your budget.
HO-1: Basic Form
HO-1 insurance, which is also known as the basic form of homeowners insurance, is probably the most basic form of home insurance out there in the Indian market. If you possess this particular type of insurance policy, your home will generally be under its actual cash value coverage. Personal belongings and valuable possessions are also covered by an HO-1 basic homeowners insurance policy, but that’s not always the case.
What does it cover?
This particular home insurance policy provides coverage for damage or loss due to 10 specific perils. These include windstorms or hail, riot or civil commotion, fire or lightning, aircraft, vehicles, explosions, theft, volcanic eruptions, vandalism and mischief, and smoke.
Who is it for?
Owing to the fact that this policy provides so little coverage, and does not cover some of the rather common events, most of the insurance companies no longer offer this basic policy. HO-1 insurance isn’t recommended for the majority of the people in India.
HO-2: Broad Form
HO-2 insurance, also known as broad homeowners insurance, is a particular type of policy that provides coverage for a wider variety of perils than an HO-2 insurance policy. Your personal property will also be under the. coverage of its actual cash value.
What does it cover?
Everything that’s under an HO-1 insurance policy, plus extra cover for risks such as damage or loss due to the weight of snow and ice over a building, any accidental discharge or overflow of steam or water, bulging or cracking caused by a sudden accidental event, falling objects, accidental discharge from a power surge, and freezing.
Who is it for?
Even though these policies offer greater coverage than the HO-1 insurance policies, they are still not recommended for anyone, as HO-3 and HO-5 policies, which are more common in India, are readily available.
HO-3: Special Form
HO-3 coverage, also known as the special form homeowners insurance policy, is the most common and popular type of home insurance policy in India. Under an HO-3 insurance policy, your time is typically going to be covered at its replacement cost, while your own assets are going to be covered up to their actual cash value.
What does it cover?
An HO-3 policy will provide coverage for your house against damages or losses caused by any peril except for those that are specifically excluded in your chosen plan. Some of the common perils excluded from an HO-3 policy include floods, earthquakes, nuclear accidents, neglect, sinkholes, acts of war or government actions, and landslides/mudslides, among others.
Who is it for?
This type of homeowners insurance policy is going to be an ideal option for most homeowners in India. No wonder it is the most popularly held homeowners insurance policy!
HO-4: Content Broad Form
HO-4 insurance policy, also known as the renter’s insurance, is specifically designed for the individuals who are renting or leasing a home, apartment, or condo.
What does it cover?
This essentially covers the personal property of a renter, at its replacement cost, against the same particular perils found in an HO-3 insurance policy. Also, this may or may not offer liability coverage for any renter.
Who is it for?
If you’re someone who’s renting an apartment, condo, or house, then this is the ideal policy for you.
HO-5: Comprehensive Form
Also known as a comprehensive insurance policy, it is often considered to provide the highest possible level of coverage for single-family homes. It is quite similar to an HO-3 insurance policy but with a few key differences and added protection facilities.
What does it cover?
An HO-5 home insurance policy seeks to cover both your house, and your personal belongings, at their replacement cost, which is generally higher than the actual cash value.
Who is it for?
Owing to its high coverage limits, an HO-5 insurance policy is a great alternative if you have a lot of high-value personal assets in your home or you simply want as much coverage as you possibly can.
HO-6: Unit-owners Form
Also known as unit-owners or condo insurance, it is a special type of insurance policy for homeowners particularly designed for those living in a condominium or co-op.
What does it cover?
In most of the cases, a association of condo will hold HOA insurance which itself will usually be covering the condo building, and specific shared areas.
Moreover, an HO-6 insurance policy includes coverage for any renovations, modifications, or upgrades you’ve made to the unit after buying it, the walls, ceiling, and floors of the unit, loss of use, personal property, and personal liability among others.
Who is it for?
If you’re someone who owns a condominium, or a co-op unit, then you’ll most certainly be requiring an HO-6 coverage. However, if you are renting one of these units, then you’ll be required to purchase an HO-4 coverage (renter’s insurance).
HO-7: Mobile Home Form
Also known as a mobile home policy, an HO-7 coverage is essentially designed to provide the same protection as an HO-3 policy but for a mobile home. This is owing to the fact that mobile homes aren’t covered under an HO-3 policy, which is specifically designed for a single family home.
What does it cover?
This policy offers coverage for a variety of structures, including modular homes, park model homes, sectional homes, trailers, single and double wide mobile homes, and single and double wide manufactured homes.
In most cases, this homeowners insurance policy will provide coverage for a mobile home as long as it’s stationary. It generally doesn’t cover loss or damages caused while the mobile home is in transit.
Who is it for?
If your home can be classified as any one of the structures that have been mentioned above, then this particular type of homeowners insurance policy might be the right fit for you.
HO-8: Modified Coverage Form
This particular type of insurance policy is specifically meant to offer coverage for homes that don’t usually meet the standards of the insurer for any other type of coverage. This means that the home is at a huge risk of damage or loss, or has a replacement cost that is higher than its actual cash value.
What does it cover?
It typically provides coverage against the same perils as an HO-1 insurance policy.
Who is it for?
More often than not, this type of homeowners insurance policy is held by older homes such as the ones that were constructed with aluminium wiring, a wrecked roof, too outdated plumbing, or other aspects that need to be rectified or replaced to qualify for other forms of coverage.
Final Words
For most homeowners, an HO-3 or an HO-5 insurance policy will be the ideal coverage. However, there are various factors like the type of structure of your home, the age and condition of that structure, the type of coverage you require, and the requirements of your mortgage lender (if any), that will allow you to determine the homeowners insurance policy type you need to protect your most valuable investment, and the various belongings and people within it.