If you own a home, you obviously need home owners insurance.
Did you know there is a basic national form for homeowners insurance which may vary by state as to offered coverage?
In Texas, home owners insurance agents can write four different types of policies.
Purchasing the right policy for your specific needs requires understanding what protection these forms offer and the differences between them.
1. HOA - Basic Named Perils
The HOA named perils policy is the most basic home owners insurance available in Texas.
A named peril is one that is specifically stated in the policy. The HOA policy pays claims based on the actual cash value of the damaged item.
Known as HO1 in other states, this policy sold by home owners insurance agents covers against certain common named perils that homeowners encounter:
- Windstorm and hail
- Fire and lightning
- Smoke damage
- Vandalism
- Aircraft
- Vehicles if not caused by insured
- Theft
- Explosion
- Riot or civil unrest
- Volcanic eruption
2. HOA+ - Broadened Named Perils
As the name suggests, the HOA+ broadened named perils policy is a home owners insurance policy that offers more coverage than the basic HOA policy.
Known as the HO2 policy in other states, this policy typically pays claims based on that item's replacement cost.
In addition to the 8 most common named perils covered in the basic form, the HOA+ also provides coverage for these perils:
- Damage caused by the weight of snow, ice, and sleet
- Freezing involving plumbing
- Falling objects, including trees and limbs
- Accidental or sudden discharge or overflow of steam or water from household appliances, HVAC systems, or plumbing
- Accidental or sudden tearing, cracking, burning, or bulging
- Accidental or sudden damage from an electrical current
3. HOB - Texas Basic Open Perils
Similar to the HO3 National Open Perils policy, the Texas HOB policy form offers broader coverage than either of the Named Perils policies.
Open Perils policies sold by home owners insurance agents document what they do not cover as opposed to what they do cover.
The Texas HOB limited Open Perils policy actually provides more coverage than the national HO3 policy as it covers some water damage.
Although the HOB policy does not cover personal belongings other than damage resulting from the 16 named perils of the HOA/HOA+ policies, it covers damage to the house from any cause other than one that is excluded. It is the most popular policy sold in Texas.
The following types of causes of loss that are excluded in an HOB policy; anything else not on the list is covered:
- Water damage
- Power failure
- Neglect
- Mechanical breakdown
- Collapse
- Fungus, mold, and wet rot
- Animals owned by the homeowner
- Rodents, insects, birds, and other vermin
- Rust, corrosion, and smog
- Smoke from certain agricultural or industrial operations
- General wear, tear, and deterioration
- Shrinkage, expanding, settling, or bulging of foundations, pavement, footings, roofs, ceilings, etc.
- Seepage or discharge of pollutants
- Earth movement
- Nuclear hazard
- Law or ordinance
- Government action
- Acts of war
- Intentionally caused loss
4. HOC - Texas Full Open Perils
The Texas HOC Open Perils policy is an extended version of the HOB policy that provides more protection for your personal belongings.
Where the HOB only covers and reimburses for the contents of your home according to HOA/HOA+ specifications, the HOC policy covers your belongings in any instance except damage caused by an excluded event.
To Summarize
The key to purchasing effective home owners insurance to protect your house as well as your belongings is understanding the different policies.
With the help of experienced home owners insurance agents, you can gauge your risk and determine which of these policies will provide the type of coverage you need!
