Homeowner's insurance is a type of property insurance that covers damage to your home, its contents, and its inhabitants. It is possessed by almost every homeowner, because all banks require some form of homeowner's insurance before they will finance a mortgage. So while it is not legally necessary to have, it is necessary for anyone who is not able to purchase a house in one payment (which is certainly most people).
What Are the Different Types of Homeowner's Insurance?
The exact amounts of coverage purchased will of course differ depending on location and the cost of your home. The policies are always capped, meaning they won't pay damages past a certain amount, but the cap is adjustable by you, the consumer. The 8 standard policies are:
- HO-1: This is "basic" insurance, and it is indeed very basic. It covers only the following 11 types of damage (and only to a limited amount): fire, lightning, windstorms, explosion, riot, theft, vandalism, smoke, and (surprisingly enough) volcanic eruption. It generally forces you to name exactly what it is your covering, so it is often used for specific objects, rather than the entire house.
- HO-2: This one is a slightly broadened version of the above policy, adding six additional perils: damage from falling objects, weight of snow and ice, freezing of plumbing and damage caused by faulty electrical and heating systems. Like the above, it only covers specific portions of a house (like the roof, for instance).
- HO-3: This is the standard policy of the vast majority of homeowners. Unlike the above two, it doesn't "name perils" it protects against, but instead names "exclusions" of things it WON'T protect against. It is designed to cover all aspects of the home, structure and it contents as well as any liability that may arise from daily use as well as any visitors who may encounter accident or injury on the premises (up to $100,000, usually). Earthquake, flood protection, war and nuclear explosions are never covered.
- HO-4: Renter's insurance. This is mostly the same as HO-2 (covering the same 17 perils), but doesn't actually protect the house (which you don't own).
- HO-5: A more expensive plan then HO-3, but covering greater liability coverage and broader protections.
- HO-6: If you own a co-op or condominium, this is the insurance for you. It covers personal property and provides liability coverage. But, similar to a renter's policy, it doesn't cover the structure, since the building will have its own policy.
- HO-7: Basic mobile home protection, but usually without any liability coverage.
- HO-8: This is usually called "older home" insurance, as it is designed for historical houses. It lets house owners with higher replacement cost than the market value insure them at the lower market value rate
Why Do I Need an Attorney?
Generally, since most banks will require you buy HO-3 insurance when you start your mortgage, an attorney isn't necessary in the choosing of your insurance plan. When an attorney becomes useful is when you actually file a claim. Many insurance companies, it has been found, automatically (and sometimes illegally) refuse to pay any claim the first time it is submitted, in hopes that this will "deter" people from making false claims. That means that you may have a perfectly legitimate claim to your insurance payment, and are still refused, or asked to provide overly-extensive evidence.
If you believe that your policy covers the damage suffered, and your claim is refused or contested, you should consult an insurance attorney or a real estate attorney immediately, who can help you not only get your money, but sometimes sue the company for falsely denying your claim in the first place. There is nothing that makes an insurance company cave-in faster than an a call from a lawyer threatening to sue, so contact an attorney to help you with your claim today.