What is the Cheapest Type of Homeowners Insurance Coverage?

The single biggest investment that a person can make in their lifetime is the purchase of their home. When you commit to purchasing a home, you are investing in the foremost living necessity for yourself and the people who share that home with you. In order to safeguard the life, love and money that you invest in your home, you need to have an adequate and reliable form of homeowners insurance coverage.

Homeowners generally select insurance coverage plans based on the value of their home and the assets included within it. There are five basic insurance policies available to homeowners, allowing households to ensure themselves at levels they can afford. The terms of these policies are standardized by the Insurance Services Office (ISO) and are therefore not likely to vary between different providers. The rates of these policies might vary from company to company, however, which is why you need to search and compare between different quotes on each policy in order to find the kind of deal that you are looking for and locate homeowners insurance companies with confidence.

Basic, Broad and Special Coverage

Homeowners looking for low-cost insurance generally go for the HO1, HO2 or HO3 coverage policies. HO1, the basic form homeowner policy, is the cheapest type of insurance coverage for a single-family home. The HO1 policy covers homeowners against 10 listed perils, all of which must be explicitly named in order to fall within the coverage. The perils generally covered under the HO1 policy include theft, explosions, broken glass, fallen aircraft, fire or lightning, hail or windstorms, rioting or civil commotion, vandalism or mischief, vehicle collisions and volcanic eruptions. Due to its limitations in coverage, many providers have discontinued the HO1 insurance policy.

The next level of home insurance coverage is HO2, the broad form homeowner policy. The HO2 policy will cover your home against all the 10 perils listed in the HO1 policy with an additional 6 more. The perils added to the HO2 policy include falling objects, the weight of snow or ice, the rupture or freezing of plumbing systems and the accidental discharge of heat or electrical sources. As a named-perils policy, each peril must be explicitly listed in order to fall within the HO2 range of coverage.

The most comprehensive level of insurance coverage for single-family homes is HO3, the special form homeowner policy. This form of insurance is an open-perils policy, which covers almost all types of damage caused to a house or structural property. The only perils not covered in this policy are the ones that are explicitly excluded, such as floods and earthquakes. The HO3 policy provides secure coverage for homeowners in areas that are generally safe from natural disasters. HO3 is the most commonly purchased coverage policy amongst today's homeowners.

Low-cost Levels of Insurance Coverage

Each of these policies are sold with up to five different levels of coverage classification. Coverage A, also known as dwelling coverage, insures against damages done to the house itself. Coverage B insures other structures on your property, including sheds, gazebos, garages, swimming pools, fences, driveways, patios and more. Coverage C insures the personal property that is in your home, including your tables, chairs, bikes, paintings, computers, stereo system and numerous other smaller items of value.

It is recommended that you insure your house for the cost of replacing it when comparing cheap homeowners insurance types. Any house that you choose to make your own should be thought of as a temple. The small additional costs of insuring your temple are worth all the time that you and your loved ones spend in your home enjoying life.

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