Everything You Need to Know About Homeowners Insurance

If you are looking into buying a home, you know that is your most significant investment. As a result, it’s vital to protect it and its content with excellent homeowner’s insurance. Unfortunately,  navigating homeowner’s insurance policies can be a little confusing and overwhelming, Which is why we took the time to break down and explain the different types of coverage options.

Different Types Of Coverage

Each insurance policy is different, and for this reason, you’ll need to go through these policies carefully to understand what’s covered and what’s not. Here are several distinct types making a home inventory list for insurance policies that you can buy.

Basic Form

It is the simplest form of insurance, and it is not seen much anymore since most mortgage firms argue that it only covers specific events like fire, explosion, lightening, theft, vandalism, damage from car or vehicle, hails and windstorms, volcanic eruptions, riots, and civil commotions.

Broad Form

It is a broader form of HO-1; this form of insurance is still designed to cover HO-1 events plus the following, falling objects, freezing of household systems like AC or heating machines, damage from the weight of ice, snow, or sleet, electrical accidents, your personal belongings, sudden cracking, tearing bulging of pipes and other household items. 

Special Form

Nowadays, this is the most famous form of insurance. Unlike the above forms, this type of policy covers any damage to your home structure. However, it does not cover specific events which are excluded under the terms of the policy.

tenant form

The tenant form refers to renters. Usually, this is known as a renter’s insurance policy, and it covers your personal belongings and personal liability. 

Comprehensive Form

HO-5 Comprehensive Form is the most expensive home insurance you can buy. Like an HO-3 policy, it covers your home against any accidental event except those excluded from the policy’s terms and conditions. Unlike the other forms it has less loopholes, and you can decide the coverage limits.

Condominium unit owners 

Typically, this is known for owners and occupants of the condominium units. It covers your personal belongings, floors, walls, and ceiling against all the perils. The coverage extends to alterations under the specified limits.

Mobile Homes From 

It is a small and unique form of policy that is specifically designed for mobile homes.


Note there are other types of home insurance we have not mentioned here, like dwelling fire form, and older home policy

Not everything is covered

One of the most important things to understand is that your home insurance covers only things in the policy. Basically, floods, earthquakes, landslides, and any construction needed to bring your home in an HO-3 policy are not excluded.

Ensure you read the policy over and over again before purchasing it. Doing this will help you understand precisely what is in the policy.  You will also need to understand what your exclusions are depending on where you live. If you live in a neighborhood full of thugs, near a factory, or closer to the city. You may need more coverage than what is offered in the standard policy package. However, this comes at an additional cost, although it’s worth getting it.

How Reimbursement Works

If something happened to your home and you lost your belongings while under your policy, the insurance company will pay or reimburse you in one of the following three ways.

Cash value coverage

Cash value coverage type of reimbursement typically comes with several cheap home insurance quotes and small payouts. In this type of reimbursement, the insurance company will issue a payment equivalent to the cost of replacement minus a deduction for appreciation.

Replacement Coverage

In this type of reimbursement, the policy will renovate your items without deducting the cost of appreciation. Note that you will only be given coverage up to the policy limits. If your cost goes beyond that, you will have to dig deep into your pocket to pay for the remaining amount.

Guaranteed coverage

Again, this is also known as comprehensive and the most expensive type of pay. With this type of policy, the insurance company will pay for the cost of replacement even if it goes beyond your coverage.


Your mortgage lender will require you to have home insurance. However, making homeowners insurance a habit will help you not build from the ground up again when something happens to your home.