Insurance companies write home policies based on industry standard forms or policy types as outlined by the Insurance Standards Office. These standard forms are used to define how policies will be written and what coverage is included. There are 6 home insurance policy types including home, renters, and condo policies. This post, however, will focus on the 3 most common ones written in Texas to build on last week’s post which addressed actual cash value policies versus replacement cost coverage (see https://wiseinsurancegroup.com/home-insurance-two-broad-policy-types/).
HOA policies are the most basic type of home insurance policy offered. These are named peril policies because they only cover the perils listed in their policy such as fire, smoke, theft, vandalism, etc. If the peril is not listed, then it isn’t covered and this applies to both the home and your contents or personal property (furniture, clothes, electronics, appliances, etc.).
HOA policies are usually actual cash value policies (home & contents), however most HOA policies can add optional replacement cost coverage on both the contents & the home. Additional optional coverage may be added, or endorsed, including;
- Water leaks & backups
- Freezing of plumbing
- Slab access & egress
- Falling objects
- Weight of ice, sleet or snow
- Collapse
- Damage caused by animals
Not all carriers offer all options so read your policy to know which ones are and which ones aren’t included.
HOB policies are referred to as broad form home insurance policies as they offer broad protection & coverage. They are an all risk policy because they cover everything unless it’s specifically excluded such as acts of war, terrorism, nuclear accident, etc.
Contents are still covered on a named peril basis unless otherwise specified and replacement cost may need to be added for contents. It automatically offers protection for
- Water leaks
- Freezing of plumbing
- Slab access & egress
- Falling objects
- Weight of ice, sleet or snow
- Collapse
- Damage caused by animals
Most of these options are covered up to the home’s insured value, meaning that if the home is insured for $200,000, then there is coverage for damage from a water leak up to $200,000. The only limit is the amount of coverage on the home. There are still a few companies who offer this policy type but most have replaced it with the HO3.
HO3 policies are similar to the HOB policy in that they are an all risk policy on the home while contents have named peril coverage. They normally include coverage for these perils:
- Sudden & accidental water leaks
- Freezing of plumbing
- Falling objects
- Weight of ice, sleet or snow
- Collapse
- Damage caused by animals
Coverage must be endorsed, or added, however, for the following perils:
- Drain backups
- Slab access & egress
- Slow drip / leak or seepage coverage
Each of these home insurance policy forms or types have their place and are applicable depending on the coverage the homeowner wants and needs, as well as what works best for them and their budget. The key is to know what you have before a claim needs to be filed.
What do you think? Share your comments, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!
