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homeowners policy is a multi-line policy because it provides
Property and Liability insurance in a single policy. By obtaining
both Property and Liability coverage in one policy, the insured
is more likely to avoid gaps in coverage and the overlapping
of coverages that often happen when several mono-line policies
are purchased instead of a package policy. It also is advantageous
to the insurance company because it means fewer contracts
and records, simplified billing systems and a reduction of
duplicate services. These savings mean the price will be less
than the cost of separate policies offering equivalent coverage.
every person or every house is eligible for coverage under
a Homeowners policy. The rules are stricter than those that
apply to the Dwelling policy:
The named insured must be the owner-occupant of the dwelling
or condominium or a renter who maintains a residential occupancy
The home cannot contain more than two families (in some states,
four) or more than two additional roomers or boarders per
Unless the insured is a renter, he or she cannot purchase
coverage for personal property only
The dwelling must be used exclusively as a residence, except
for certain incidental occupancies such as offices, professional
or private schools or studios
Farms may not be covered under a Homeowners policy; mobile
homes are eligible if the Mobile Home endorsement is attached
Dwellings under construction and secondary or seasonal residences
Homes that are being purchased on an installment contract
or are occupied under a life estate arrangement are eligible
under the Homeowners policy include the named insured and
residents of the same household, provided they are relatives
or are under 21 and in the care of the insured or a resident
Homeowners policy is divided into two sections: Section
I provides Property insurance and Section II provides Liability
and Medical Payments insurance.
as there are several Dwelling forms to provide increasing
levels of coverage, there are different Homeowners forms to
vary the extent of coverage: HO-2, HO-3, HO-4, HO-6, and HO-8.
Each of these forms provides identical Liability coverage.
It is the Property coverage that varies with the Homeowners
HO-2 (HO 00 02), the Broad form, provides broad coverage
for the dwelling and personal property. The covered perils
are similar to those provided by the DP-1 with the Extended
Coverage perils and V&MM coverage. Breakage of glass and
theft are also covered. In addition, it broadens certain perils
and adds other perils.
HO-3 (HO 00 03), the Special form, provides open
peril coverage for loss to the dwelling and other structures.
It provides broad coverage for personal property, which is
identical to the HO-2’s coverage of personal property.
HO-4 (HO 00 04), the Tenants form, insures tenants
- people who do not own the building where they reside. It
provide broad coverage for personal property only that is
similar to the HO-2’s and HO-3’s broad coverage
of personal property, and no coverage for the dwelling.
HO-6 (HO 00 06), the Condominium form, provides broad
coverage on the personal property of condominium owners, similar
to that provided under the HO-2, HO-3 and HO-4. It provides
very limited dwelling coverage.
HO-08 (H0 00 08), the Modified Coverage form, is designed
for older homes with replacement values that may far exceed
their market values. It provides basic coverage on the dwelling
and personal property that is similar to the DP-1 with the
Extended Coverage perils and V&MM coverage, but also includes
certain restrictions on valuation of losses. In many areas,
the HO-8 is no longer available.
you own property, you need coverage. Homeowners insurance
was created to provide protection for your most basic and
treasured assets - your home and personal belongings. A lack
of knowledge about the conditions of the policy you select
substantially reduces the value of your insurance protection.
In other words, the value of your policy increases in proportion
to your ability to use it effectively. In order to utilize
the policy most effectively, you must develop a complete and
thorough understanding of the nature of your homeowners policy
and of insurance in general.
derive the full benefit from your homeowners insurance,
you must become familiar with the coverage provided by the
policy. The more you know about coverage, the less likely
you will be to overlook potentially covered losses or to file
claims for losses that are not covered, which may adversely
affect your claim record. For example, an acquaintance of
mine who lives in Arizona lost hundreds of dollars worth of
frozen food during a power outage. After learning, to his
dismay, that the loss was not covered under his homeowners
policy, he bought a generator to prevent a repeat of the incident.
you own your home, your house and any structures
attached to it are covered - up to the dollar limit you specify
when you buy the policy. Other structures on your property
are covered for 10 percent of the amount of coverage on the
house. That applies to any building not attached to the house,
be it a detached garage, a shed or a play house for the children.
And a structure is still considered detached even if it’s
“connected” to the house by something like a fence.
you have other residential properties, such as a
second home or a cottage at the shore, you’ll have to
insure them separately, even though your homeowners policy
does provide limited coverage on their contents.
the insurance on your home is not designed to cover business
activities, you can jeopardize your coverage by conducting
any sort of commercial venture there. Your homeowners policy
contemplates that you’re going to use your dwelling
“primarily as a private residence,” although you’d
probably get by with minding the neighbors’ children
now and then for a fee or with using your den to write a book
in your spare time.
elaborate business operations may require special coverage,
and you can get that by adding an inexpensive endorsement
to your homeowners policy. The endorsement is intended for
professional people, such as doctors or lawyers, who have
their offices in their homes, or for anyone who operates a
private school or a studio at home. For example, there was
the case of the Virginia resident who operated a recording
studio in his home, where he had about $100,000 of equipment
for business purposes. He should have taken out a commercial
business use of your home - even to give dancing
or music lessons - could affect not only the insurance on
your dwelling, but the coverage of your personal belongings
and your liability to others.
note that the precise coverage afforded is subject to the
terms, conditions, and exclusions of the policy as issued.
This explanation is intended only as a guideline. This information
is not intended to be considered investment, tax or legal
advice. It is provided, for your education only. This is not
an insurance contract. All terms and coverages are defined
solely by your policy.
more details, please call a PaulBalep representative toll-free 1-800-964-8614 to receive a free, no-obligation
quote. Like so many satisfied clients, we think you’ll
be happy you did. And to set up a meeting to discuss additional
insurance and financial goals: Visit us online at www.paulbalep.com,
or e-mail us at email@example.com.
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