Property Management Nation

If you own a home or are looking to buy, home owner’s insurance is mandatory.  You can still choose your provider and there are six different policies to choose from.  What you end up paying for this insurance will depend on factors such as type of residence, age, deductible amount, location, proximity to a fire department and the scope of your desired coverage.  Here is a list of the different kinds of coverage available:

1. HO-1: basic coverage that insures against lightning and fire damage.
2. HO-2 or broad coverage: adds falling objects, building collapse, hot water system, plumbing and heating or air-conditioning problems including bursting or ruptured pipes, damage from heavy snow or ice to the basic coverage.
3. HO-3 or special coverage: covers your home as well as detached structures from damage or loss from any problems except ones that are specifically excluded by your personal policy.
4. HO-4:  this is a tenant’s policy that covers your household contents as well are your personal belongings and adds liability protection, additional living expenses and medical payments to the broad coverage.
5. HO-6:  is for condominium unit owners who want to add to the coverage set up by the association and protects personal property inside the unit and includes personal liability protection.
6. HO-8 or older home policy:  Sometimes older homes are not eligible for standard insurance and this modified policy will pay for today’s processes and standard building materials that are needed to replace older period materials found in the home.

The most common policy purchased is the HO-3.  In order to keep your insurance premiums lower you should compare quotes from at least three different insurance companies and utilize online resources by looking at your state’s Department of Insurance website.  A list of jurisdictions can be found here:  State Web Map.  Some organizations or groups offer lower rates, so check with any that you belong to (i.e. service clubs and alumni associations).  Discounts are also offered by insurers if you use the same one for all of your insurance needs (life, health, auto and home).  You can save money on your premium by increasing your deductible as well.  Areas that are at high risk for natural disasters may offer lower rates on goverment-backed loans also.  Some insurers also offer discounts for “protective devices” such as burglar alarms, smoke and fire detectors and fire extinguishers.

If you are a renter, you should have renter’s insurance even if your landlord or condominium association has coverage.  Their coverage will only cover the building itself and not your belongings.  HO-4 is insurance designed for the renter to protect you.  You need to consider which type of coverage you wish to have, ACV (actual cash value) or replacement cost coverage.  ACV will cover just what the object is worth at the time of disaster and not what it will cost to replace it today.  While replacement cost coverage will cost you more in premiums, it will pay out more in the event of loss or damage.  If you have jewelry, electronics or antiques they may only be covered up to a certain point as well.  You should consider buying separate riders or endorsements for expensive items (like a diamond ring).  Just like home owner’s insurance, renters insurance premiums will depend on your deductible, location, your insurance company and whether or not you need any additional coverage.

One very important thing both renters and home owners should do on top of purchasing insurance is to take inventory of what you have.  Take pictures, record serial numbers, keep receipts and document everything you own.  Be sure to store this inventory in a safe and fire-proof place in your home and store a duplicate outside the home.    This will make sure you get reimbursed for items in the event that you need to file a claim.