Policy protecting a homeowner against property and casualty perils. A basic HO-3 policy (HO stands for homeowner's) is a standard policy and the most comprehensive. It will cover damage to the home from natural causes such as fire, lightning, windstorms, hail, rain, or volcanic eruption. In addition, man-made disasters such as riots, vandalism, damage from cars or airplanes, explosions, and theft will also be reimbursed. Damage caused by falling objects, the weight of ice, snow or sleet, freezing of plumbing, heating or air conditioning systems, electrical discharges, or the rupture of water heating or protective sprinkler systems also fall under the HO-3 policy. Flood, earthquake, war, and nuclear accident are not covered; flood and earthquake insurance can be purchased separately. Other types of homeowner's policies include HO-4 for renters (which also could include co-ops), HO-6 for condominium owners, and HO-8 for older homes. In general, homeowners should try to purchase coverage that will pay for the replacement of damaged or stolen items at current market prices, not at the prices for which those items may have been acquired years ago. There are dollar limits for high-ticket items such as jewelry. A Floater or an endorsement, purchased separately, can provide the additional coverage needed.
The average homeowner's or renter's policy provides approximately $100,000 of liability protection. A special policy is required for homeowner's business risk coverage. Home business owners need both property and liability insurance, since the homeowner's policy provides only limited coverage for business equipment, in most cases up to $2,500 for business equipment in the home and $250 away from the home.
Most mortgage lenders require homeowners to obtain adequate insurance coverage before they agree to provide a mortgage.
