Are you confused about the different types of homeowners insurance policies out there? Don’t worry, you’re not alone! We are going to break down the differences between HOA, HO3, and HOB policies in a simple way so you can make informed decision.
Substandard Basic Policy
First up, we have HOA, or the “basic” policy. This type of policy covers your home and personal belongings against a limited number of perils, such as fire or theft. It’s a good option if you’re on a tight budget.
Perils vary depending on the policy, but commonly include:
- fire and lightning
- sudden and accidental damage caused from smoke
- windstorm, hurricane, and hail
- explosion
- aircraft and vehicles
- vandalism
- riot and civil commotion
- theft
Better Policy
Moving on, we have HO3 policies, which are often referred to as “all-risk” policies. This type of policy covers your home and personal belongings against all perils, except for those specifically excluded in the policy. HO3 policies are typically a good option if you live in an area prone to natural disasters or if you have expensive personal belongings that need extra protection. This policy contains all the 8 perils of the HOA but also 4 more perils.
Additional Perils
- Collapse
- Falling Objects
- Freezing
- Water Damage
Best Policy
Finally, we have HOB policies. HOB policies, or “homeowners insurance – broad form”, are a type of insurance policy that covers both your home’s structure and your personal belongings. In general, HOB policies are considered “all-risk” for the building, which means they cover all perils unless specifically excluded. For personal belongings, HOB policies are typically “named perils”, meaning they only cover specific perils that are listed in the policy.
Along with covering all the perils in both the HOA and the HO3 policies, it also covers 2 important factors.
Additional perils:
- Water backup
- foundation
What Basic Insurance Policies Often Exclude And How Speaking with an Agent Can Fill the Gaps:
It is important to also talk about the common things that are not covered by Homeowners insurance policies.
Exclusions vary by policy, but typically include
- earthquake
- flood
- wear and tear (maintenance issues)
- mold, fungus, and rot
- mice, insects, and other pests
- continuous and repeated seepage of water
- power surge
- smog
One of the most important perils that is not covered but is important to have is flood insurance. Living in Texas this is a major concern for many homeowners. You must have an additional policy to protect yourself from this. Call your insurance agent today and make sure you are covered.
So, there you have it! A quick and easy breakdown of the differences between HOA, HO3, and HOB policies. Remember, the type of policy you choose will depend on your individual needs and budget. Be sure to do your research and speak with an insurance professional to find the best policy for you. Give us a call at 281-988-2500 and our agents at Texan Insurance can quickly review your policy for any gaps in your coverage.
Here are few articles to help you make sure you covered:
5 Reasons Why Going Bare on Home Insurance Is A Huge Mistake
Before You Buy Homeowner’s Insurance, Read This
What Factors Determine Your Home Insurance Premium?
