What Are the Three Main Types of Property Insurance Coverage

There are three main types of property insurance coverage: dwelling, personal property, and liability.

The dwelling coverage type protects the physical structure of your home, including the walls, roof, and foundation.

This type of coverage is essential because it can help you repair or rebuild your home in the event of a disaster or damage.

Personal property coverage, on the other hand, protects your belongings, such as furniture, clothing, and electronics.

This type of coverage can help you replace or repair your belongings if they're damaged or stolen.

Liability coverage protects you financially if someone is injured on your property or if you're held responsible for damaging someone else's property.

This type of coverage can help you pay for medical expenses, court costs, and other related fees.

There are three main types of property insurance coverage, but let's focus on the types of homeowners insurance. The HO-1 policy, also known as the basic form, only covers the structure of your home and not your personal belongings.

This type of policy has become less common in recent years, as most mortgage lenders don't consider it sufficient. If you have an HO-1 policy, you're left with added personal risk if someone is injured on the property.

The HO-2 policy, or broad form, extends beyond basic form coverage to protect your home's structure and personal property, including liability coverage. HO-2 policies may include perils like artificial electrical current, cracking or other damage to pipes, and falling objects.

Here are the main types of homeowners insurance:

HO-3 and HO-5 policies offer more comprehensive coverage, but may have exclusions, such as earthquakes, floods, mold, and nuclear damage. It's essential to review your policy carefully to understand what's covered and what's not.

HO-2 (Broad) insurance is a type of homeowners insurance that offers more comprehensive coverage than basic form policies. It's also known as broad form homeowners coverage.

This type of policy extends beyond basic form coverage to protect your home's structure, personal property, and includes liability coverage. If you have an HO-2 policy, you can expect to be covered for named perils such as artificial electrical current, cracking or other damage to pipes, falling objects, freezing, water or steam overflow, and the weight of snow or ice.

Named perils mean that if the peril isn't explicitly stated on your policy, you won't be covered. For example, if you have an HO-2 policy and your home is damaged by a hurricane, but hurricanes aren't listed as a covered peril, you may not be covered for the damage.

HO-2 policies typically cover your personal property and, in some cases, personal liability. Some policies may include additional coverage for sudden or accidental damage, and the weight of ice, snow, or sleet.

Here are some of the additional perils covered by HO-2 policies:

Keep in mind that HO-2 policies only cover named perils, so it's essential to review your policy carefully to understand what's covered and what's not.

The HO-5 policy is the most comprehensive form of homeowners insurance, offering open peril coverage on both your dwelling and personal property. This means that your home's structure and belongings are protected against any perils not specifically named as exclusions.

With an HO-5 policy, you'll have higher coverage limits and fewer restrictions on perils compared to other types of insurance.

This policy typically includes replacement cost coverage for personal property losses, which means you'll be reimbursed based on the replacement cost of the item rather than its actual cash value.

Some common exclusions to HO-5 coverage include earth movement, government actions, infestation of birds or rodents, intentional loss, and mechanical breakdown.

Here are some of the perils that are typically covered by an HO-5 policy:

Keep in mind that not all home insurers offer HO-5 policies, and not all homeowners may qualify for this type of coverage.

The HO-6 policy is specifically designed for condo owners. It covers everything inside your unit, including personal belongings and personal liability.

Condo owners may be responsible for the interior walls of their units, so the policy typically includes some dwelling coverage. This is important to ensure you have enough coverage to pay off your mortgage and purchase a similar unit if your building is damaged or destroyed.

HO-6 policies are named perils policies, which means they cover specific events such as damage from an aircraft or vehicle, explosions, fire, hail, lightning, riots or civil commotion, smoke, theft, vandalism, and windstorms. However, they typically exclude perils like mold, earthquakes, and sewer backups.

Condo owners don't own the entire building, so they aren't responsible for personally insuring the entire property. Instead, the HO-6 coverage provides limited protection for certain areas of the building, as well as personal belongings coverage and liability protection for the condo owner.

The condo association typically has a master insurance policy that protects common areas, grounds, and external parts of the building, and condo owners help pay for this insurance through condo or HOA fees.

The HO-7 (mobile home) policy is a type of insurance designed specifically for mobile or manufactured homes. It's also known as the MHP (mobile home policy).

This policy offers coverage similar to HO-3 policies, but is tailored for mobile homes instead of standalone houses. It includes open peril coverage for the structure of RVs, mobile homes, and trailers, which means that all risks are covered unless they're explicitly excluded from the policy.

If you're considering an HO-7 policy, keep in mind that coverage for personal belongings is a bit more limited and runs on a named peril basis. This means that your personal items are only covered under a specific list of circumstances, including damage or loss from an aircraft or vehicle, explosions, fire, hail, lightning, riots or civil commotion, smoke, theft, vandalism, and windstorms.

Here's a breakdown of the types of risks covered under a named peril policy:

Overall, an HO-7 policy provides a range of coverage options for mobile home owners, including protection for the structure, personal belongings, liability, additional living expenses, and medical payments. However, flood and earthquake coverage would need to be purchased separately.

The HO-8 (Modified Coverage) policy is a type of homeowners insurance designed for older properties, typically built more than 40 years ago.

This policy functions like standard home insurance, but may include certain provisions to insure an aging home.

HO-8 policies are ideal for homeowners who have older homes or homes that would be more difficult to replace, such as architecturally significant houses or historic landmark homes.

The policy covers both your home's structure and your personal property under a named perils policy, including damage from aircraft or vehicles, explosions, fire and lightning, hail and windstorms, riots, smoke, theft, vandalism, and volcanic eruption.

Here's a breakdown of the standard coverage included in an HO-8 policy:

Flood and earthquake coverage would need to be purchased separately, just like with a standard home policy.

There are three main types of property insurance coverage, each with its own level of protection. These include basic form, broad form, and special form policies.

Basic form policies provide the least coverage, typically protecting against damage caused by fire, windstorms, and other natural disasters. Broad form policies offer more comprehensive coverage, including damage from leaking appliances and structural collapses. Special form policies provide the most coverage, but may still exclude damages from floods and other specific perils.

Here's a breakdown of the three types of property insurance coverage:

Special form policies, like HO-3 insurance, offer comprehensive coverage for dwellings and personal belongings, but may still have exclusions for certain perils.

Inland marine coverage is a type of property insurance that covers property kept on land, not on water, despite its name.

This coverage is especially useful for businesses that use specialized equipment or property that isn't covered by a standard commercial property policy.

Some examples of property that is covered by inland marine coverage include accounts receivable, computers, and contractor equipment.

If you're a business owner who uses property that isn't covered by your commercial property policy, you should ask your agent about inland marine coverage.

Inland marine coverage can also cover property in transit, which can be a big relief for businesses that have to transport valuable equipment or goods.

Here are some examples of property that inland marine coverage can cover:

Auto Coverage is a must-have for businesses that use vehicles for work. Commercial auto insurance provides liability and property damage protection for cars, trucks, and vans that you use for business.

This type of insurance can be especially useful for businesses that operate food trucks, service utility trucks, or other specialized vehicles. It can also cover trailers and other types of vehicles that are used for business purposes.

Having the right auto coverage can help protect your business from financial losses in the event of an accident.

Replacement cost vs. actual cash value coverage is a crucial aspect of property insurance. These two types of coverage are often confused with each other, but they have distinct differences.

Replacement cost coverage pays to repair or replace your property at current costs, even if the cost is more than what you originally paid. This means your policy will pay enough to rebuild your building and replace your property with new items.

Actual cash value coverage, on the other hand, pays replacement cost minus depreciation. Depreciation is a decrease in value because of wear and tear or age.

Here's a quick comparison of the two:

If you have actual cash value coverage, the policy might not pay enough to fully rebuild your business. This is especially true for businesses with older equipment or property that has depreciated over time.

An HO-7 insurance policy covers mobile or manufactured homes, including trailers, sectional homes, RVs, and modular homes.

This type of policy provides coverage for your home's structure and your personal belongings, liability, additional living expenses, and medical payments.

Flood and earthquake coverage would need to be purchased separately.

Your personal belongings are covered under a named perils policy, which means they're only covered under a specific list of circumstances.

Here are the specific risks covered for your personal belongings:

The HO-7 policy includes open peril coverage for the structure of RVs, mobile homes, and trailers, which means all risks are covered unless they're explicitly excluded from the policy.

Renters insurance is a must-have for anyone who doesn't own their home. It's specifically designed for renters, offering protection for their personal property and liability.

Renters insurance policies, also known as HO-4 policies, typically provide named peril coverage for tenants' personal property. This means your belongings are protected against damage from explicitly named disasters, such as fire, theft, and vandalism.

The HO-4 policy can even help pay for lodging and other living expenses if your rental becomes uninhabitable after a covered loss. This is a huge relief for anyone who's ever had to deal with a sudden move due to a disaster.

Named peril coverage under a renters insurance policy can include damage from an aircraft or vehicle, explosions, falling objects, fire, freezing, hail, lightning, riots or civil commotion, smoke, theft, vandalism, water damage from plumbing or HVAC overflow, water heater damage, and the weight of snow or ice and windstorms.

Renters insurance offers a level of financial security that's hard to ignore. By investing in a renters insurance policy, you can rest easy knowing your belongings are protected in case of an unexpected disaster.