Insurance for the Homeowner

Most associations should require that homeowners are insured for many reasons:

1. Damage to Common Area Property
2. Insurance against dog bites, especially if they have an aggressive breed, but necessary for all                     breeds if you allow them in your community.
3. Auto Insurance in case of accidents within the community, i.e. gate damage, landscaping,                          trees, road signs, etc.
   A recent article in LinkedIn by CAI and JGS Insurance broke down the different types of homeowner insurance. Do you know what they mean?

HO-1: This is the basic form for a single story home and covers only these 10 items (this is no longer offered by most insurance companies) –

• Fire or Lightening
• Aircraft
• Hail
• Vehicles
• Explosion
• Smoke
• Riot
• Theft
• Vandalism
• Falling Objects

HO-2: This is called a Broad Form and is an advanced HO-1.

Structure of home covered at replacement cost and your belongings at cash value. Covers all 10 of the items above plus these 6 added perils –

• Weight of ice, snow or sleet
• Accidental overflow of water or stream
• Accidents from built-in appliances
• Freezing
• Damage from a power surge
• Volcanic eruption

HO-3: This is a special form that covers home at replacement cost and belongings at cash value. Offers all-risks coverage for your home and belongings except for the list of excluded perils in your policy. The list is long with items such as war or government actions.

HO-4: Contents Broad Form is normally called Renters Insurance and covers all personal property and belongings inside your rental and belongings are usually covered at replacement cost 

HO-5: This is a Comprehensive Form. It’s a super-charged version of HO-3 ideal for expensive homes with expensive items such as art, expensive jewelry, etc. Seen mostly for high value homes in high-risk areas such as beach home, etc. This is when you need more protection than with a HO-3.

HO-6: This is mostly used for Condo owners and coverage varies based on what condo association insurance covers. The minimum is loss of use, personal liability, loss assessment coverage, personal property, etc.

HO-7: Mobile Home Form. This is an HO-3 policy for mobile or modular homes. It covers trailers, fifth wheels, single wide trailers, double wide trailers or modular homes.

HO-8: Modified Coverage Form. This is for homes that don’t meet standard requirements, i.e. older homes with plumbing or wiring that was never updated since the 1940’s. They are also named peril policies like an HO-1.

Being aware of what homeowners should have can help protect your association against claims and allows you to know when you can subrogate to a homeowners insurance policy when necessary.