Types of Home Insurance

Isn't Home Insurance All the Same?

Insurance can be confusing. Most of us know there are different types of coverage, but do you know there are different types of home insurance policies? I know I had no idea there were difference types of home insurance before we got into the insurance business. Home insurance should be home insurance. Why are there different types of policies? 

We can explain that!

Let’s look at the different types of policies.

HOA or Named Perils Policy

This is the most basic of home insurance policies. All coverage on this policy will be Actual Cash Value (ACV) only. This means the value of the damaged property will be paid out at the depreciated amount, based on the item’s age and the condition at the time of the claimed loss. So, for example, if your 5 year old TV is stolen, the Insurance carrier will only pay out what it would cost to buy that 5 year old TV. Most people don’t want to buy a 5 year old TV. HOA policies only cover specific hazards (specifically named perils) which generally include the following:

1. Fire or Lightning 

2. Wind/Hail (unless you are in certain counties where carriers will not cover wind/hail) 

3. Sudden and Accidental smoke damage (from a covered fire) 

4. Explosion 

5. Aircraft and Vehicles (unless caused by the insured or a resident of the home) 

6. Vandalism/Malicious Mischief 

7. Riot or Civil commotion 

8. Theft (on premises) 

These may vary between carriers, but they will be listed specifically on the policy. 

HOA+ or Broad Perils Policy

These policies are HOA policies with additional common perils:
1. Falling Objects, including trees or limbs.
2. Weight of ice and snow
3. Sudden and Accidental water discharge
4. Sudden and Accidental water/steam damage from water heating system

HO3 or Open Perils Policy

This is the most commonly used Home insurance policy in the US. It covers your dwelling (home building) on an open perils basis, meaning it covers all perils unless specifically excluded. Common exclusions include:

1.  War
2. Nuclear
3. Wear, tear, rust, mold
4. Intentional acts
5. Government actions

HO3 policies also include Replacement Cost coverage for your home. Replacement cost for your contents is sometimes included, depending on the carrier.  It can be endorsed onto the policy if the basic HO3 doesn’t include it. So if your 5 year old TV is stolen, if you have Replacement Cost on your contents, the TV will be valued at the cost of a new TV today.

HOB or Texas Open Peril Policy

This is very similar to the HO3 (the National form) but it includes additional water damage protection which must be endorsed onto the HO3. Most carriers will use the HO3 form, but the HOB is great coverage.

Home insurance policies will NOT cover Flood or Earth quake. They are a separate type of policy with different coverage options. If you live on the Gulf coast, chances are Wind/Hail coverage will not be included and you may have to go through the Texas Windstorm Insurance Association (TWIA) for a separate Windstorm policy.

Please speak to your agent about which policy form is best for your circumstances. That is what you have an agent for! If your agent won’t answer your questions, please give Brockman Premier a try!

There are three ways to request a quote for your insurance needs: 

* Visit our website

* Email us

* Call Brockman Premier Insurance at 877-987-8683  

Explaining Flood Insurance

MAKE IT SIMPLE- FLOOD INSURANCE

   Our next installment in the Make It Simple series is Flood Insurance. 

Consumers are rarely required to carry flood insurance unless they are in a high risk Flood Zone. If you are, your mortgage house will most likely require you carry a flood insurance policy. But you should talk to your agent and make sure you know if you should have a flood policy or not, regardless of which flood zone you are in. 

   Your flood policy has a Dec page, just like every other insurance policy. It will “declare” who you are, what property you have covered, the insurance limits you have chosen and how much you are paying.

   Flood Insurance is backed through the federal government under the Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program regardless of who you buy the policy from. There are various levels of coverage and deductibles to choose from. You will have a separate deductible for the building and for the contents. Unlike Home and Auto insurance, Flood insurance only covers You. There is no “other party” liability in flood coverage.

Building Coverage: This covers physical damage to your home due to rising flood waters Keep in mind- two properties, or two acres, have to be flooded for flood insurance to pay out. This covers the building and its foundation, electrical and plumbing systems, a/c equipment, furnaces, walls, flooring… etc. The amount of building coverage should be based on your dwelling/replacement cost amount on your home insurance policy. Flood coverage cannot be higher than the home insurance amount. It caps at $250,000 for residential homes.

Contents Coverage: This covers physical damage to personal property such as clothing, furniture, electronics and certain valuable items, such as artwork (up to $2500). It will not cover currency or precious metals.

Deductibles: The Building and Contents coverage have a separate deductible. The higher the deductible, the lower the premium, but the more you will pay out of pocket in the case of a claim.  

*It is worth noting there is a standard 30 day wait period unless you are closing on a new home.  And Flood policies have to paid in full before coverage will begin. If your Mortgage does not require you have a flood policy, they will not let you include it in your escrow payment so you will need to make that payment in full directly. 

So that is Flood coverage. It is a simpler Dec page than home and auto with less coverage to understand. But please make sure you do understand what it will and will not cover and how much coverage you need to have. 

There are three ways to request a quote for your insurance needs: 

* Visit our website

* Email us

* Call Brockman Premier Insurance at 877-987-8683