Understanding Homeowners Insurance – 5 (HO-5)

Not only is your home your most important investment, but it’s also where you keep all of your belongings. All of your clothes, computers, TVs, memories, heirlooms, and so much more. If something were to happen to your home, would you have enough money saved to be able to replace your home and everything in it?

One way to protect your home is to have a quality homeowner’s insurance policy that will give you the coverage you need in case of an emergency. While many cheap homeowners insurance tipshomeowners don’t realize, there are several different types of insurance policies that have different advantages and disadvantages. Some of the most common types are HO-1, HO-2, and HO-5. If you’re looking for an affordable plan that provides the most coverage for your home and belongings, HO-5 is one of the best options.

HO-5 what it covers

This type of homeowner’s insurance is an “open perils” policy, which means that as long as the specific perils aren’t listed as exemptions, the damages will be covered. Instead of listing all of the disasters that are covered, it just lists the things that aren’t covered. An HO-5 policy will provide coverage against more damage than most other plans. It’s often seen as a simpler plan and easier to manage.

Obviously, one of the most important things to know about the policy is what damages aren’t covered. There are 21 different perils that are covered under the HO-5, some of them include:

  • Earthquake
  • Rust or corrosion
  • Power failures
  • Mold or fungus
  • Neglect
  • Intentional loss
  • War

This is just a few of the common problems that people run into after buying the policy. You should always talk to your insurance company to get a complete list of exclusions for your plan. One of the worst things that can happen is for you to lose your belongings and find that your policy isn’t going to pay for the damages.

Just like most insurance plans, the HO-5 has a significant area that they don’t cover, flood damage. The large majority of insurance policies will not cover any damages from flooding. Depending on where you live, you should consider buying an additional rider for your policy to cover the natural disaster. Water damage can completely destroy your home and everything inside of it.

What you need to know about your policy

One of the most important factors that you should consider before you purchase a plan is the type value they place on your belongings, either replacement value or cash value. They sound similar, but there is a huge difference between the two.

With replacement value plans, the insurance company will give you the amount of money it would cost to buy that item at today’s cost. Cash value (also called “actual cash value”) plans will pay you for an item minus depreciation of that item. This means that the older that the item is, the less money that the insurance company will pay you for the belongings. As you can see, the difference between the types could mean the difference between being able to replace all of your belongings, or just some of them.

How large of a policy do you need to buy?

After you decide what kind of policy you want to buy, the next decision is how much insurance do you need for your home and your belongings. Every year thousands of families lose their home because of a natural disaster, then they find that their insurance policy wasn’t large enough to cover their losses. There are a couple of different factors that go into calculating how large of a plan you need.

The first thing is the value of your home (and any other structures on your property). This doesn’t necessarily mean what you could sell your home for, but what it would cost to rebuild your home.

The second thing is the stuff that you have inside the home will significantly impact your homeowner’s insurance plan. Make sure that your plan will be large enough to replace everything inside of your house. Go into each room and take inventory of all the stuff you own. Not only will this help you get a starting point for your homeowner’s policy, but will also give you a list of your stuff that you need replacing if you have to file a claim.

One thing that most people don’t think of when they are applying for homeowner’s insurance is any additional costs if something was to happen to your home. Would you have to pay to stay in a hotel? Would you have to pay to have someone come and clean up the house or property? There are a lot of forgotten costs that people forget to calculate into their policy amount.

Having the right size policy is a delicate balance between making sure that you have enough to cover everything, but not paying too much in monthly premiums. Your insurance agent can ensure that you have enough coverage for your home and belongings.

HO-5 Insurance Coverage

You never know what tomorrow is going to bring. Nobody ever wants to come back to a home that is destroyed, but it happens to countless families every year. Covering your home is one of the best purchases that you can make. If you don’t have a policy, or you have any questions regarding homeowner’s insurance, we would be happy to talk to you. HO-5 policies are just one of the many different insurance products that we offer to the Denver, CO. area. We are proud to provide quality and affordable insurance plans. Our knowledgeable agents would be happy to talk to you about your insurance needs, give us a call at (720) 209-4598 or use our contact form.

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