How to Choose the Right Homeowners Insurance policy

The word insurance has sort of become a synonym to living, of late.  It has become indispensable living need after the basic needs of oxygen, water & food.  Insurance is all pervasive.  It connects with us, whatever we do and wherever we go.  In this hazardous world, insurance is a must, if we desire to be compensated for losses, be it life or our precious possessions.  There are so many types of insurances, which all most cover every aspect of our living and every possession we love.  Homeowner’s Insurance is one, among many others.


It is self explanatory.  This insurance is designed to insure owners home against damages to the structure and/or to the contents in the home.  The coverage can also include liability against hazards and accidents to the structure of the home and its possessions. In U.S Homeowners Insurance was first introduced in the year 1950.  Due to the need for standardization of the policies and terms and conditions of coverage, Insurance Services Office (ISO) was formed in the year 1971.  Over the years, the Insurance Law and Policies have been amended from time to time to suit changing demands.  Home Owners Protection Act (HOPA) came into being in the year 1998 to protect the owners from detrimental practices of Private Mortgage Insurance (PMI) companies.  This Act makes it mandatory on the part of Insurers and Lenders to disclose to borrowers all their rights with special emphasis on cancellation policies. 


There are 7 types of standardized homeowner’s insurance policies in the U.S.  They are categorized as Home Owners (HO) 1 to HO 8.  All these policies are typically designed to give a broad choice to the owner to choose from.  Each category of these policies is discussed here under;
HO 1:  Basic Homeowner Policy
This policy covers the home against 11 hazards/perils/accidents with an option to include possessions, which need to be listed.  Earth quakes and floods are excluded.

Hazards include – natural calamities namely fire accidents, storms, lightening – accidents namely deliberate and malicious mischief, thievery and damages caused due to crashing of vehicles and aircraft, civil riots, breakages, volcanoes, smoke and also personal causatives/liabilities.

HO 2:  Broad Homeowner Policy

This type extends coverage against 17 hazards/perils/accidents including all 11 of HO 1.

HO 3:  Special Homeowner Policy

This is specially designed for single family homes against all hazards, excluding earthquakes and floods.  Possessions are also included with specification of the hazard.

HO 4:  Renter’s Insurance Policy

This policy is typically designed to protect possessions of tenants against the hazards as listed in HO 2 and HO 3.

HO 5:  Premier Homeowner Policy

This policy covers all possessions against all hazards, unless specifically listed as excluded.

HO 6:  Condominium Policy

This policy is exclusively designed for owners under condominium/joint dominion.

HO 8:  Older Homes Policy

This type of policy benefits owners living in older houses.


As per American Association of Insurances Services there are 5 forms of coverage choices/classes.

Class A:  Value of main dwelling/structure with attachments – excluding land.

Class B:  Value of other structures detached from main dwelling owned by the owner.

Class C:  Value of several personal possessions of particular listed items, including garments, furnishings, furniture etc.

Class D:  Value of cover extends to additional expenses namely rentals during the period of owners outside living due to repairs/renovation of the insured structure.

Class E:  This choice is for inclusion of additional coverage for case specifics.  This choice covers lawsuits/claims of damages or injuries caused to others on owner’s property or due to owner’s activities elsewhere.


Apart from the above 5 forms/classes, coverage facility for medical expenses on others though non residents, due to causes occurring on the owners property.

Under the coverage, certain exclusions are specifically stated over which compensation cannot be extended.

All insurance policies under Homeowner’s Insurance segment differ from one another and offer varied policy protection.  Standard policies usually cover:

  • Damage to main structure and other subsidiary structures,
  • Damage to owner’s possession,
  • Endorsement of jewelry,
  • Personal liabilities, and
  • Additional costs incurred by owner elsewhere.



In U.S when it comes to buying home insurance is a must, because, the lending agencies insist on insurance coverage to avoid possible revenue loss in the event of irregular payments or avoidance by the borrower.