Last week’s blog introduced the two broad categories or types of home insurance policies, actual cash value and replacement cost policies. Let’s refine that and add a layer. There are three major “form” types of home policies, HOA, HOB and HO3. Most people’s home policies fall into one of these three types although condo’s have something different (we’ll look at condo policies in a future blog post).
HOA policies are the most basic type of home policy offered.
- They are a named peril policy in that they only cover the perils listed in their policy (fire, smoke, theft, vandalism, etc.)
- Named peril coverage applies to both the home and the contents or personal property (furniture, clothes, electronics, appliances, etc.)
- HOA policies are usually actual cash value policies (home & contents), however most HOA policies are endorsed with optional coverage to make them replacement cost on both the contents & the home
- Additional optional coverage that must be endorsed in order to be covered include,
- Water leaks & backups
- Freezing of plumbing
- Slab access & egress
- Falling objects
- Weight of ice, sleet or snow
- Collapse
- Damage caused by animals
- Most carriers add some of these options, but not all are available. Read your policy to know which ones are and which ones aren’t
HOB policies are referred to as broad form policies as they offer broad protection & coverage.
- This is an all risk policy. It covers everything unless it’s specifically excluded (acts of war, terrorism, nuclear accident, etc.)
- Contents are still covered on a named peril basis unless otherwise specified (replacement cost may need to be added for contents)
- It automatically offers protection for
- Water leaks & backups
- 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 full value of the home (the only limit is the amount of coverage on the home)
- There are still a few companies that offer this policy type but most have replaced it with the HO3
HO3 policies are similar to the HOB policy in that it’s an all risk policy on the home & contents have named peril coverage
- It automatically adds coverage for
- Sudden & accidental water leaks
- Freezing of plumbing
- Falling objects
- Weight of ice, sleet or snow
- Collapse
- Damage caused by animals
- Coverage must be endorsed
- Drain backups
- Slab access & egress
- Slow drip/leak or seepage coverage
Each of these 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 be informed and know what you have before a claim needs to be filed.
Have a question? Let us know and we’ll post the answers on-line as well as on our Facebook page! Thursday’s blog will address what’s going on with Texas Home Insurance Rates?
