Homes, condos and apartments are major investments, which is why owners should make sure their properties are always properly covered under a comprehensive property insurance policy. With so many policy choices, how do new homebuyers know which type is right for their situation? Good question. Let’s walk through the most common types of property insurance.
Homeowner’s insurance
There are several tiers of homeowner’s insurance:
- HO-1: The most basic homeowner’s insurance policy. It offers very limited coverage for perils that include fire, lightning, windstorms, hail, explosions, riots and civil commotion, aircraft, vehicles, smoke, vandalism, mischief, theft, glass and volcanic eruptions. It does not always cover personal belongings damaged or destroyed in the home.
- HO-2: This policy covers all the perils in HO-1, in addition to plumbing water damage, falling objects, household appliances and HVAC. Unlike the HO-1, it does cover damage and destruction of personal property within the home.
- HO-3: This policy offers the broadest range of coverage, and it is, by far, the most common policy form homeowners use. It offers coverage against all of the most common perils, except for those that are specifically excluded (typically, these will be nuclear accidents, sinkholes, earthquakes, flood, landslides, etc).
Landlord insurance
There are two types of insurance that landlords may have: DP3 and HO3. Wondering which one is the right fit for you? The regular HO-3 policy is acceptable to use if the landlord owns a multi-family property and lives in one of the units. However, if a landlord owns any property that he or she rents out to tenants and does not live in, then he or she should use a “Dwelling Fire Policy.” The most popular of the DP policies is the DP-3, which offers “open peril” coverage that insures both the physical building, any loss of rental use and personal liability.
Renter’s insurance
Known formally as an HO-4 policy, renter’s insurance is not for the homeowner, but for the tenants occupying the space. It covers personal liability and the loss of a tenant’s belongings caused by the same perils covered by a broad form policy. Depending on the policy, it may also cover living expenses for the tenant if they must vacate the property for repairs.
Condo insurance
HO-6 policies are for owners of condo and co-ops. Because you own a specific part of a larger structure, an HO-6 ensures that you’re covering your space, all the belongings within it and additional expenses should you need to vacate under peril.
Vacant home insurance
Imagine someone breaks into your unoccupied property and is seriously injured by a hazard inside. Even though they were in the wrong for trespassing, they can technically file a claim or sue you for liability. Vacant properties are also at greater risk for perils, such as fire and weather-related damages. To avoid headaches like this, make sure your vacant home is covered properly.
Builder’s risk insurance
Sometimes known as “Course of Construction,” builder’s risk insurance covers property where a structure is currently being developed. Depending on the specific policy, it may only cover the actual structure under construction, or it may also cover any additional on-site materials.
Buying your first home in Atlanta?
At Atlanta Fine Homes Sotheby’s International Realty, our highly qualified agents are committed to serving your needs as a first-time home buyer — offering personalized insight and advice to help you find the right home in the right neighborhood at the right price. For more information, call us today at 404.237.5000.