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A typical Homeowners policy provides a comprehensive coverage against damage to your house and your personal belongings. There are several standard types of homeowners policies, referred to as forms, which are offered by most insurance companies. Each of these policies normally provides identical Liability Coverage. The policies vary according to the property covered and the scope of coverage, i.e. the number of perils you can protect your property against. Before choosing a policy that suits your needs and your situation, it is reasonable to get acquainted with the differences underlying the options you are offered.
Homeowners Basic Form, also known as HO-1, is the fundamental policy type offering the basic set of benefits. It covers losses resulting from the limited set of perils listed in your policy. More specifically, HO-1 covers damage due to the following reasons: fire or lightning, wind or hail, smoke, volcanic eruption, explosion, riot and civil unrest, vandalism or malicious mischief, theft, damage from vehicles as well as structural damage and self-damaging instances (e.g. damage by glass material that is part of the building, a part of the building falling, etc). Thus, Homeowners Basic Form provides protection to your home and its contents, such as furniture, carpeting, personal possessions, including highly priced objects, paintings and antiques, against the listed hazards.
Basic Coverage policies vary and correspondingly offer different degrees of coverage. It is of utmost importance that these policies cover only the items mentioned in the insurance contract. To make sure you are compensated for all your personal belongings, make an inventory of them listing each item specifying its value, its serial number and, if possible, providing the information about when and where this item was purchased and supplying it with receipts. A comprehensive inventory of your possessions can help you determine whether the policy is really appropriate for you and whether you have to extend the coverage by endorsements to protect your valuable possessions.
Personal Liability as part of Basic Coverage typically embraces Bodily Injury Liability, according to which it covers medical and legal costs in case you harm a person physically, and Property Damage Liability which goes into effect in case you damage somebody’s property.
Homeowners Basic Form is a packaged type of a policy. Yet it is said to be rather limited. Both standard sections of Basic Coverage policy – the one protecting personal property and the other ensuring personal liability – normally have limits which are specified in the corresponding parts of the policy.
Nowadays many insurance companies do not even offer Basic Coverage policy. Judging by the estimates, it does not guarantee adequate coverage of personal property and requires too high a premium cost at that. Not being a cost-effective solution to the problem of choosing an appropriate Homeowners Insurance policy with an optimum balance of price and coverage, Basic Coverage is no longer widely available.
At the same time you should not forget that your premium cost depends on a number of factors, such as the location of your property, the particular insurance company you have chosen, the cost of the home and your property value, the dollar amount you pay as a deductible and the number of perils you want to protect your home against. Taking into consideration all these factors, it is possible to adjust your premium so that it will not be a financial burden. Remember that the best way to go about selecting a Homeowners policy is to carefully study all the provisions and exclusions stipulated in your policy. It is always possible to introduce some modifications to your policy and thus tailor it according to your needs. Yet, at present insurers often advise comprehensive types of policies, such as a Special Form Policy or Broad Coverage. The final decision is yours, but when making a choice, remember that even with its narrow coverage HO-1 still can protect your home against the listed perils which otherwise may cause you serious financial hardships.
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