A kind of property insurance policy covering the risks of homeowners. Coverages include damage to insured's property or personal property, additional living expenses, personal liability, theft, and medical coverage for others. In computing insurance needs, replacement value (cost to rebuild, excluding land). An insured's minimum protection should be 80% of replacement cost. If the replacement cost requirement is not met, reimbursed loss will be computed using the formula: where R = reimbursement, L = the amount of loss less deductible, I = amount of insurance actually carried, and RV = replacement value. There are several kinds of homeowner policies including:
- Homeowners-1 (HO-1): referred to a basic coverage, HO-1 provides protection against major property -damages risks such as fire, riot, and smoke. Losses from these perils may be restricted in the amount of coverage. The policy gives protection from certain liability exposures-comprehensive personal liability, damage to property to others, and medical payments.
- Homeowners-2 (HO-2); known as the broad form provides broader coverage than HO-1. HO-2 covers major perils that cause property damages such as falling objects, collapse of structures, and freezing of plumbing. It also provides protection from the liability exposures as in HO-1.
- Homeowners-3 (HO-3): referred to as special form, it has "all-risk" coverage on the dwelling itself.
- Homeowners-4 (HO-4) Renters: it is for those who are renting an apartment or a home. It protects renter's personal property on the same basis as HO-2.
- Homeowners-5 (HO-5) Comprehensive: it is the most comprehensive coverage, but it is costly.
- Homeowners-6 (HO-6) Condominium: it is similar to HO-4 except it is designed for condominium renters rather than owners.
- Homeowners-8 (HO-8): it is for owners of older, remodeled buildings. It has high replacement costs. Coverage is based on actual cash value instead of replacement cost.