Homeowners Insurances in 19 Easy Steps

Dec 14, 2021 | Personal Insurance

Choosing the best homeowners insurance for your home and family can be challenging. In addition, to get the best home insurance for your home, you must do a lot of research and ask a lot of questions. Whether you’re a first-time homeowner or a seasoned home buyer, you will benefit from reading this article about homeowners insurances in 19 easy steps. Furthermore, if you know how homeowners insurance works, choosing the right homeowner coverage is as easy as ABC. 

Homeowners Insurances in 19 Easy Steps

Every home needs different home insurance coverage. Because we have different home and family needs, the home coverage applicable to your neighbor may not be appropriate for your home. Moreover, there are different factors to consider when selecting the best homeowners coverage for your home and family. Furthermore, follow these 19 steps to ensure that you get the right coverage for your home and family needs. 

Understand what homeowners insurances cover

To fully protect your home, you must understand what protection homeowners insurance provides. What do standard homeowners insurances cover? First, a standard home insurance policy provides the following coverage:

Dwelling coverage

This policy covers the physical home structures of a home when it gets damaged by a covered peril. It also covers attached home structures like garage, porch, and deck.

Personal property coverage

A home insurance policy also protects the contents of your home. Also, it covers your personal belongings like gadgets, furniture, and clothing.

Liability coverage

It protects you and your family against lawsuits resulting from bodily injury or property damage you and your family caused to someone else. Furthermore, damage or injuries caused by your pet are also covered. In addition, homeowners’ insurance also covers the medical expenses of visitors injured inside your home. Moreover, liability coverage does not cover injuries and damages you and your family incurred in your home.

Additional living expenses coverage

In case a covered hazard damages your home and renders it unlivable, this policy will cover the costs of temporary rehousing. 

Choose the appropriate type of homeowners insurance

There are different types of homeowners insurance available in the market to meet the protection needs of every home. Consequently, insurance companies offer various types of homeowners insurance designed according to coverage needs and type of home. 

8 Types of Homeowners Insurances

HO-1 Basic Form

As the name implies, this policy only provides basic protection. Also, it provides coverage against specifically named perils. HO-1 policy reimburses repair or replacement expenses of a damaged home at their actual value cost. In addition, it only covers damages caused by these 10 specific perils:

  • Fire
  • Hail or Windstorm
  • Explosion
  • Riot
  • Damages caused by aircraft 
  • Damages caused by vehicles
  • Smoke
  • Vandalism
  • Volcanic eruptions
  • Theft 

HO-2 Broad Form

This policy reimburses home repair or replacement expenses at your home’s replacement cost. Also, it covers the contents of your home at their actual cash value. Furthermore, it offers broader coverage as it covers extra protection against the following:

  • Damages caused by falling objects
  • Freezing
  • Snow or Ice damages
  • Accidental overflow or discharge of water 
  • Cracking caused by accidental events
  • Powersurge 

HO-3 Special Form

This is the most common type of homeowners policy insurance companies offer. What’s more, this policy covers homes at their replacement cost while the contents of the home are covered at their actual cash value. Also, it provides protection against any peril except those excluded in the policy. An HO-3 policy typically doesn’t cover the following perils:

  • Flood
  • Earthquake
  • Sinkhole
  • Mudslide
  • Act of war
  • Nuclear accident
  • Neglect

In case you need additional home coverage, this policy allows homeowners to add endorsements. And another thing is you can add an endorsement on top of your HO-3 policy to ensure complete protection.

HO-4 Contents Broad Form

This policy is also called the renter’s policy. This policy is specifically designed for people who only rent or lease their home, condo, or apartment. Furthermore, a renter’s policy covers the personal properties of the renter at their replacement cost. 

HO-5 Comprehensive Form

This policy provides comprehensive coverage for single-family homes. Also, it covers both the home and its contents at their replacement costs. Moreover, it protects both home structures and personal belongings against all covered perils. 

HO-6 Unit Owners Form

It is also known as condo insurance. Also, this is a special type of homeowners insurance tailored for homeowners living in condos or co-ops. Furthermore, condo insurance typically provides coverage for:

  • Walls, ceilings, and doors of the unit
  • Personal belongings
  • Any upgrades, improvements, and renovations made after acquiring the unit.
  • Personal liability 
  • Loss of use 

HO-7 Mobile Home Form

This policy covers different types of mobile homes. In the same way, its coverage is the same as the HO-3 policy but specifically designed for mobile homes. On the other hand, take note that a mobile home is only covered when it is stationary. Furthermore, any damages or losses incurred while the mobile home is in transit are not covered. 

Structures under HO-7 Policy
  • Park model homes
  • Modular homes
  • Single and double-wide manufactured homes
  • Trailers
  • Single and double-wide mobile homes

HO-8 Modified Coverage Form

This policy covers homes that didn’t meet the requirements of other home policies. In addition, homes typically fall under this policy are those with a high risk of loss like old homes. What’s more, this policy provides the same coverage as the HO-1 policy with an actual cash value limit. 

Determine requirements of homeowners insurances for homes under mortgage

Most mortgage lenders require homeowners to secure homeowners insurance policy. On the other hand, if your home is under a mortgage, talk to your lender about which specific coverage you need to purchase.

Know the contents of your home

Personal property coverage has limits. Moreover, it is important to do an inventory of your personal belongings to determine if the property coverage is enough to cover it all. Most of the time, personal property coverage is not enough to cover high-value items. On the other hand, if you own valuable items like jewelry and collectibles, secure personal property endorsement to protect all of your belongings.

Consider your family size

Standard home insurances usually give only 10% of the policy limit for additional living expenses. If you have a big family, it may not be enough to cover your rehousing expenses in case your home needs to be evacuated for repair or replacement. Secure a higher ALE limit to ensure you will have enough financial support in case your home becomes unlivable.

Consider your home location 

Some natural disasters like floods and earthquakes are not covered by homeowners insurance. If you live in a place prone to natural disasters excluded from your policy, secure an additional rider to ensure your home is still protected.

Do you conduct business at home? 

For homeowners who have businesses based at home, getting business insurance is vital. Homeowners insurances don’t cover business operations, assets, and equipment, even when you operate at home. You also need to inform your insurance provider if you do the business operations at home as it may nullify your home insurance. The type of business insurance you need to get depends on the nature and operation your business has. Here’s the list of business insurance you can buy for your home-based business.

Home occupancy

Is this home your permanent residence or vacation home only? Do you often travel for long vacations or business? Take these things into consideration as insurance companies have terms and conditions regarding home occupancy. Most insurance companies do not cover unoccupied homes for more than 30 days. If you often leave your home for a longer time, you can add unoccupied and vacant home insurances as endorsements. This will ensure continuous coverage for your home, even when you’re away.

Determine your coverage limits

Insurance companies typically offer three valuation costs for your home and personal belongings. In addition, assess your home and family needs in choosing the right coverage limits. Policyholders can choose from the following coverage limits:

Actual cash value

This coverage will pay for your home and personal belongings at their replacement cost minus depreciation. This coverage is usually not enough to cover home and personal property in case of total loss. 

Replacement cost

It covers your home and personal belongings at their current market value without depreciation. 

Guaranteed replacement cost 

Some insurance carriers offer guaranteed replacement cost coverage. This coverage guarantees to pay for your home and personal properties repair and replacement even if it exceeds your policy limit. This coverage offers complete protection against inflating home rebuilding costs.

Shop around

When you’ve already decided, it’s time to shop around for available home insurances policies around your area. Shopping around enables you to get better deals and coverage. 

Get the service of an insurance broker

Getting the service of an insurance broker will make home insurance hunting easier for you. As Insurance brokers work with different insurance companies it is easier to get quotes from various insurance providers.

Compare quotes and coverage from different insurance providers

Ideally, it is best to get home insurance quotes from at least 3 insurance providers. Getting quotes from different insurance carriers helps you get suitable home insurance according to your needs and budget. According to ValuePenguin, the average cost of a home insurance policy in the US is around $1,445 per year.

Check for policy inclusion and exclusions

Every insurer offers different home policy inclusions and exclusions. Check which insurance company meets your home insurance needs and budget.

Check insurance carrier reputation and financial strength

Look for a reliable and trustworthy insurance carrier. Company reputation and financial strength determine the insurance company’s reliability. Review the insurance company’s customer feedback and ratings from credit rating agencies. Customer feedback will give you an idea of how insurance companies handle customer concerns and claims. Credit ratings show the insurance company’s financial strength, coverage offerings, and availability.

Choose the right deductible

Home and auto insurance often comes with deductibles. A deductible is the amount of money the policyholder agreed to share in case of an insurance claim. It is important to choose the right deductible according to your financial capability. You can choose between the two:

Dollar amount deductible

Homeowners who opt for a dollar amount deductible will pay a fixed amount for every claim. Dollar amount deductible typically starts at $500 up to $2,000 depending on the policyholder and insurance company’s agreement. 

Percentage deductible

Policyholders with percentage deductible will pay a specific percentage of their coverage limit. If you choose a two percent deductible and your coverage limit is $1 million, then you have to pay $20,000 for every insurance claim. 

Some may go for higher deductibles as it significantly lowers your insurance premiums. But beware of the financial problems it may cause if you don’t have enough emergency funds for home repairs or replacement. Choose the deductible you can afford to pay in case of an insurance claim.

Check for discounts

You can ask your insurance broker for discounts you are eligible for. Discounts can save you lots of money if you know how to get one. Insurance companies often give discounts for the following:

  • Welcome discounts for new policyholders
  • Loyalty discounts for longtime customers
  • Newly built houses get discounts as they have a low risk for damages and repair
  • Homes with theft and fire safety systems have a lower risk for theft and fire 
  • If you get multiple insurances like homeowners, auto, and life insurances.

Choose your insurance policy and coverage

With all things considered, you can now choose the right insurance coverage for your home and family. Make sure to choose an insurance plan with enough coverage limits. For protection needs excluded from the policy, get a separate coverage or add an endorsement. 

Purchase the policy

With the current situation, you can buy your home insurance plan online. Your insurance broker can assist you with how to purchase your policy. 

Review the contract of the purchased policy

Not all homeowners insurances are the same. After purchase, you will receive your policy contract by email. It is important to review the declarations and wordings in your policy. It includes the policy coverage, deductibles, and premiums. Check for policy exclusions, terms, and conditions. 

The process of insuring your home would be a breeze if you have the knowledge and right people to assist you. For full protection of your home and personal properties, get the right home insurance coverage. In the event of a loss, insufficient home insurance coverage is like having a broken umbrella when it rains. 

Team AIS here in Denver, CO has excellent insurance experts who can assist you in getting the right home insurance for your home and family. Call us and let’s discuss how we can make sure of your home and family’s protection today!

DISCLAIMER: Please note that some of Advantage Insurance Solutions’ articles may have affiliate links from the Amazon Associates Program, with no additional charge to the reader. Before we publish a review, we utilize and evaluate the products we recommend. In addition to the products we’ve personally tested, we’ve received recommendations from many of our readers. That said, we want to make sure it is clear that if you use our links to purchase something, we will receive a small compensation from it. Thank you.