Everything You Need to Know About Comprehensive Home Insurance

There are a few moments in a person’s life which are bound to stand out more than any other due to the magnitude of the event. One such event is when a person finally saves up enough money for a down payment on a home along with the ability to afford the ongoing costs of a mortgage. 

A major part of owning a home, as well as renting in some situations, that is often overlooked, however, is the investment of home insurance. There are a variety of different types of home insurance a person can consider, but the most commonly required type is comprehensive insurance. Learn everything there is to know about this type of home insurance, including how much is usually legally required, so that you understand this nuance. 

What is Comprehensive Home Insurance? 

For those who may be unfamiliar with the term, comprehensive home insurance is a form of insurance coverage which offers financial reimbursements from any problem besides those which are specifically excluded in the policy. There are two other types of home insurance which are quite commonly seen, named perils and broad from, with the former being a policy that only offers coverage for perils listed in the contract and the latter is simply a toned down version of comprehensive home insurance.

How Does Comprehensive Home Insurance Work? 

The process by which a comprehensive home insurance plan works is quite simple. First and foremost, comprehensive home insurance will be paid through one of two methods: an escrow account or directly. Should the policy be through an escrow account the lender will likely have the payment made yearly. However, if paid directly, a person can typically choose to pay monthly, quarterly, semiannually, or annually. 

In return for this payment, a comprehensive home insurance policy will be active every single day of the year. Should something occur to your home that is covered under your policy, all that is required is contacting the insurance company and informing them of what occurred. After this step, the insurance company will send out an adjustor to assess the damage to ensure it falls under the scope of the policy. The insurance company will then determine the settlement amount and how you will be reimbursed for repairs. 

What Does Comprehensive Home Insurance Cover?

Comprehensive home insurance policies can vary drastically in terms of their coverage, but the majority of policies cover a person’s entire home along with other structures that are on the property, typically including personal belongings. As for events which are actually covered under a comprehensive home insurance policy, the most commonly see include:

• Damage caused to a home from a house fire or a wildfire
• Damage to a home that comes from exposure to smoke
• Damage to a home that is caused by a natural disaster such as an earthquake
• Vandalism or mischief damage that impacts a home due to criminal or accidental actions
• Theft of personal belongings from a home
• Damage that occurs to a home due to civil commotion 
• Repairs needed on a home due to a collision with a car or some other type of vehicle

What Does Comprehensive Home Insurance Exclude?

Naturally, the exclusions on a comprehensive home insurance will vary from policy to policy and sometimes from state-to-state. For perspective, finding hurricane insurance in Florida will be easy and likely mandatory due to the risk of the weather condition, however, hurricane insurance will not be common, if offered at all, in a state such as California. Common exclusions from comprehensive home insurance policies include: 

• Claims related to maintenance issues in a home such as bug infestations, issues with the manufacturing of the home, or something else
• Acts of war or terrorism in an area
• Nuclear disasters under the Nuclear Liability ad Compensation Act
• Issues that fall under other type of insurance policies 

The Different Levels of Home Insurance Coverage

Determining how much home insurance you actually need can be challenging as not all levels are legally required. With that said, the following levels of home insurance coverage outline the different coverage options which can be helpful: 

HO-1

The HO-1 home insurance policy is the most basic form of coverage that a person can consider. The coverage under this policy includes some of the most common potential issues in areas, with the following ten being the events protected against:

• Fire or lightning
• Windstorm or hail
• Explosions
• Damaged caused by an aircraft
• Damage caused by vehicles
• Riot or civil commotions
• Vandalism or malicious mischief
• Smoke damage
• Theft
• Volcanic eruptions

HO-2

The HO-2 home insurance is the broad form home insurance mentioned earlier and covers everything in the HO-1 policy as well as snow and ice damage, accidental overflows of water, freezing of plumbing, bulging or cracking, damage from falling objects, and sudden damage from artificially generated electrical currents. 

HO-3

The HO-3 home insurance policy is the most common type seen among homeowners due to the wide level of coverage it provides. Unlike the HO-1 and HO-2 policies, and HO-3 policy offers coverage from every peril except for those specifically outlined. So long as the incident is none of the following, it will be covered:

• Power failure
• Industrial pollution and smoke
• Earthquakes
• Floods
• Intentional damage to a home
• War or nuclear accidents
• Pets and insects
• Settling, wear, and tear
• Negligence
• Government actions
• Damage to unoccupied homes
• Deterioration due to weather 

HO-4

The HO-4 home insurance policy is specifically for those who are renting a home or apartment and typically adds additional living expenses and liability coverage inclusions. 

HO-5

The HO-5 policy is the comprehensive home insurance policy which offers everything the HO-3 plan does, except that it pays out replacement costs rather than the actual cash value of the property.  

Stay covered from anything and everything today

Home insurance is an incredibly important part of owning a home. It’s impossible to predict what will occur in the future, and ensuring your property is protected against every possible event is crucial. Whether it’s theft, vandalism, freak weather events, or even needing to rebuild the entire home due to a natural disaster, comprehensive home insurance can keep a roof over your head. Ensure that you are meeting the minimum that is legally required under your mortgage, but consider investing in additional insurance if necessary.