NDSU Extension Service - Ramsey County


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Homeowners Insurance

Homeowners Insurance


                For most people, a home is the largest purchase they will ever make. To protect this investment, insurance is a must. In fact, mortgage lenders usually require homeowners to have adequate homeowners insurance. Even if you rent a place to live, you will want to buy a policy designed for renters that covers both your liability and personal belongings.

                Homeowners and renters insurance are combinations of property insurance and liability insurance. The property portion of homeowner policies provides protection for loss or damage to your house and other structures on the property, as well as your personal property. Renters insurance covers loss or damage to your personal property. The liability portion of each policy protects you from having to pay for another person's injury or damaged property when you are held responsible.

                Some companies write their own homeowner policies, but most use standard forms developed by a company called ISO. This makes it easy to compare policies from company to company. They range from HO-1 to HO-8, but not all types are offered in every state. Policies are written in one of two ways:

  • The policy covers only the perils that are specifically named in the policy, or
  • The policy covers all perils except the ones specifically identified as not covered

                    HO-2 (Broad Form) covers 18 specified perils (the cause of a loss) that can lead to damage. Examples of coverage are damage or loss from fire, theft, windstorms or vandalism.

                    HO-3 (Special Form) provides protection on the structure for all perils except those specifically excluded, such as flood, earthquake, neglect, war, or nuclear accident.

                    HO-4 (Renters Contents Broad Form) is commonly referred to as renters insurance. This provides protection for the renter's household contents and other personal belongings. It also covers extra living expenses, liability coverage and medical payments.

                    HO-5 (Special Form) is offered by some companies. It covers everything included in HO-3 policies, as well as providing additional coverage. Review the policy to find out specifically what is included.

                    HO-6 (Condominiums) insures condominium owners for personal property losses and additions that the condominium association may not cover. It typically covers all perils included in an HO-2 policy. Before purchasing a condominium, clarify what the condominium association's insurance covers, and what would be your responsibility.

                    HO-8 (Actual Cash Value) is designed for older homes where the replacement cost would be much higher than the market or actual cash value of the home. This type of insurance is sometimes called market value, modified or older home coverage. These policies specify that the home would be returned to a livable condition with commonly used materials. For example, a well-preserved historical home might include beautiful woodwork, imported marble or other unique features that would be extremely expensive to replicate. With this type of coverage, the home would be repaired or replaced using more common, less expensive materials.


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