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
Release of a portion of a property from a mortgage. ...
Arrangement between neighbors permitting one of them to put a beam for support on another neighbors wall. ...
(1) Government seizes private property, but does not provide fair and reasonable compensation for it. (2) Property is seized and the owners rights abolished because of a legal violation. ...
Increase in the value of real or personal property. The price may increase because of a number of factors, such as shortage in supply, improved economy , favorable political environment, ...
The meaning of a disclosure statement is a legal document signed by both parties, the lender and the borrower or buyer. This statement outlines the terms and conditions, the potential ...
Money payments to be delayed for a future date or extended over a period of time. ...
The Federal Reserve Bank's regulation applying to the amount of credit that may be advanced by brokers and dealers to customers to buy securities. ...
Real annual return on a real estate investment. It equates the initial investment with the present value of future net cash inflows from the investment. The IRR can be determined by using a ...
Written enumeration of the desired selling prices associated with homes or office buildings for sale. The prospective buyer can then determine if the properties for sale are within his ...
Have a question or comment?
We're here to help.