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Home And Condo Insurance

Home and Condo Insurance - Why You Need it

As a responsible homeowner, buying insurance for your home is the best thing you can do.  It is also probably one purchase that you hope you will never, ever use.

 

So, why bother?

 

Your home is most likely the largest asset you own.  It certainly is a major investment. But still, people often cringe at paying monthly for home insurance - something that feels like it is a waste of money.  

 

That is, until something happens and they find their home with major damage.

 

Having adequate homeowners insurance can allow you to repair, even rebuild should something unfortunate happen to your dwelling.  Insurance also makes it possible to protect your personal belongings and replace them if necessary.

 

If you applied for a loan to purchase your home, lenders require homeowners insurance before granting a mortgage.  Because lending companies often shoulder up to 80% or more of a home’s value in cash, they need to be assured that their financial interests are well protected.

 

As a part of the process of obtaining homeowner’s insurance, properties are assessed by insurance inspectors to check the upkeep of the home and to determine the extent of coverage needed.  

 

Only basic coverage may be required,but in some cases, where there is heightened risk of flooding or earthquakes, more coverage may be required.

 

What is covered and what is not with the different homeowners insurance types available?  Read on to find out.

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Homeowners Insurance Types

 

Below is a general breakdown of policy types, but each insurance carrier provides potentially different coverage options with varying features.

 

HO-1: This the most basic homeowners insurance policy available.  It has limited coverage that protects your home from a specific list of 10 named perils. What are these?

 

  1. Fire or smoke

  2. Explosions

  3. Lightning

  4. Hail and windstorms

  5. Theft

  6. Vandalism

  7. Damage from vehicles

  8. Damage from aircrafts

  9. Riots and civil commotion

  10. Volcanic eruption

 

This basic form policy usually does not include personal property coverage or personal liability coverage.  

 

Because of its very limited coverage, it is more difficult to find a carrier that will offer this barebone coverage, especially when a mortgage is held on the property.  Purchasing more comprehensive coverage is often a better value.

HO-2: Also called a Broad Form policy, covers the above mentioned perils plus the following additional items:

  • Accidental discharge of water or overflow of plumbing

  • Falling objects

  • Freezing of household systems like the AC or heating

  • Sudden and accidental damage of pipes and other household appliances

  • Sudden and accidental damage from an artificially generated electrical current

  • Weight of ice, snow or sleet

 

HO-2 policies cover personal property in the home, and in some cases, also include personal liability.  Just like the HO-1, this kind of policy only covers the items that are specifically listed and no others.

 

HO-3:  HO-3 provides extensive coverage of the insured home including the structure and the contents within.  Because of the broad range of protection it provides, this is the most common policy purchased by homeowners.  

 

It protects against all 16 of the most common perils (see above) and almost any other perils except for these exclusions:

 

  • Earth Movement

 

  • Ordinance of law

 

  • Water damage (although sudden and accidental water damage is included)

 

  • Power failure

 

  • Neglect

 

  • War

 

  • Nuclear hazard

 

  • Intentional loss

 

  • Government action

 

  • Collapse (some coverage may be provided in your policy)

 

  • Theft to a dwelling under construction

 

  • Vandalism or malicious mischief (only if vacant more than 60 days)

 

  • Mold, fungus, or wet rot (some coverage may be provided in your policy)

 

  • Wear & tear, deterioration

 

  • Mechanical breakdown

 

  • Smog, rust & corrosion

 

  • Smoke from agricultural smudging and industrial operations

 

  • Discharge, dispersal, seepage of pollutants

 

  • Settling, shrinking, bulging, or expanding

 

  • Birds, vermin, rodents, insects

 

  • Animals owned by insured

HO-4.  This is known as Renter’s Insurance. This policy is designed for people who rent the home or apartment they live in.  It protects personal possessions, as well as parts of the apartment that they own including fixtures and cabinets which were bought and installed by the renter.  

 

This type of policy does not include dwelling coverage because renters are not responsible for the house or apartment building structure.

 

HO-5.  This type of insurance is called the Comprehensive Form and is also known as All Risk.  Of the insurance types already mentioned, this is the most expansive but also the most expensive.  It is similar to HO-3 but with enhanced coverage.


The All Risk Insurance covers both structure and personal property based on replacement cost value (RCV) It is open for peril for both dwelling and personal property and also has higher limits for losses or damages to valuable items like electronics, jewelry and similar items.

 

In comparison, an HO-3 policy pays you the replacement value less depreciation cost keeping the premiums lower.  In addition, HO-3’s are open for peril for dwelling but will cover only named perils for personal property.

 

HO-6.  Also called Condominium Owners Insurance Coverage.  As the name implies, this insurance policy is designed for condominium unit owners or those who live in a co-op.  

 

The amount of coverage that a condominium policy provides can vary . It is dependent on the amount of coverage provided by your condominium association’s master policy.

 

What is the master policy?  This is the insurance that covers the structure of the building itself and may include coverage of the common areas.  In most cases, it does not cover the interior structure within your condominium unit or built ins like cabinets or bathroom fixtures.

 

Given the coverage in your particular situation, you may need to purchase additional coverage.  The HO-6 policy may include dwelling, personal property protection, loss of use, personal liability, medical payments and loss assessment coverage, as well.

 

HO-7.  The HO-7 is designed for Mobile Home Owners. It is basically the same as the HO-3. It may include, but is not limited to:

 

  • Parked mobile homes

  • Recreational vehicles

  • Modular homes

  • Trailers, including travel and fifth wheel trailers

  • Double wide mobile homes

  • Sectional homes

 

It is important to remember that with any kind of policy, sudden and accidental water damage due to plumbing failures, heating and air-conditioning, and household appliances may be covered when included, but not flood damage.  

 

In insurance parlance, flooding is defined differently from water damage and requires separate insurance coverage.

Alternative Insurance Options

 

In California, almost all homes are considered to be in earthquake and fire zones and all homes in the United States are considered to be in a flood zone.  However, some homes are in a Non-Preferred flood zone which makes coverage from FEMA required.

 

When basic insurance policies do not provide for all your insurance needs, there are alternative insurance policies to supplement your coverage, including:

  • Flood Insurance protects your home and belongings from damage from flood waters rushing through your home. These policies are issued by the Federal Emergency Management Agency and administered through your regular carrier.

 

Even if you do not own a home in a Non-Preferred flood zone, like in Southern California, this type of coverage may prove useful for the occasional heavy storms that pass through wreaking havoc on unprepared storm drains like we have seen multiple times since 2016.

 

  • Earthquake Insurance. This is recommended for high risk areas, like most of California, and covers your home in the event of damages caused by an earthquake.

 

Most insurance agents will highly recommend this supplemental coverage when you have substantial equity in your home. This type of policy is issued by the California Earthquake Authority and facilitated by your insurance carrier.

Five Star Restoration Can Help

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Water damage is something that you hopefully will not experience ever in your home. The best protection against this is by being proactive.  As noted above, sudden and accidental damage is what is covered, not long-term damage!

 

So, what can you do to ensure your policy will protect you?

 

Here are some suggestions:

 

  • Regularly check your pipes for leaks.

 

  • Ensure that your roof and gutters are clean and in good condition to prevent water coming into your home.

 

  • Check your household appliances like refrigerators, dishwashers, garbage disposal, HVAC system for leaks that can cause water damage.

 

  • Inspect seals around windows and doors.

 

 

  • Have your roof inspected from time to time to ensure good maintenance.

 

 

However, accidents do happen and you may find your home with water damage. What can you do when this happens?  

 

When this happens, call in a professional restoration company to mitigate damage.  FIVE STAR RESTORATION is a top rated water damage restoration company and we work quickly to remove water and dry the affected areas to prevent further damage and stop the growth of harmful molds.

 

Here’s what we do for you:

 

Free diagnostics to determine type and extent of water damage.

 

Water Removal, Drying and Sanitation. We have specialized equipment to do the job effectively. Our technicians work quickly to dry and sanitize the affected area in your home to make it safe for occupancy as soon as possible.  

 

If needed, we safely remove any flooring, carpets or walls that have been damaged and work with trusted contractors to have your home repaired quickly.

 

Insurance Assistance.  Water damage restoration can be a big drain on your wallet. If you have a coverable loss, we properly document the work and work directly with your insurance adjuster to get your water damage claim filed and paid.

 

FIVE STAR RESTORATION gives you invaluable insurance assistance so a stressfull situation can be as little headache as possible.

 

If you have experienced flooding or water damage in your home, call us for a quick response and high quality assistance.  We have technicians on standby 24/7 to help you.

 

Call us at this number - 951.368.2227.

Tags:Home And Condo Insurance, home insurance options, condo insurance coverage