HO3 vs. HO6: What Are the Main Differences?
Homeowners insurance, also called home insurance, isn’t an opulence but a requirement. And not simply because it guards against theft and harm to your valuables and property. Most mortgage lenders demand insurance coverage from borrowers for a property’s full or fair market value (often the purchase price). They won’t approve a loan or fund residential real estate deals without seeing confirmation of this insurance.
Homeowners’ insurance is a type of property insurance that protects against losses and damages to a person’s home, as well as to the furnishings and other belongings inside. It also offers liability protection against mishaps in the house or property. Every homeowner’s insurance plan has a liability threshold that establishes how much coverage the insured would have in an unexpected event.
Ensuring you acquire the best insurance policy can be daunting. And understanding how various home insurance policies, such as HO3 vs. HO6, operate can be downright perplexing.
What is an HO6 Homeowners Policy?
An HO6 policy is insurance for individuals who owns a condo or co-op unit as the owner. It is a specified risks policy that covers both your individual possessions and other assets in the home. This means that it will only pay for your belongings to be damaged by the specified dangers listed in the policy.
Conventionally, this kind of policy typically covers your personal property, personal liabilities, walls, floors, and ceilings when you reside in a condo. However, it does not insure the building’s real structure, and neither will your homeowner’s association’s master insurance policy protect your personal belongings, just like renters insurance does.
An HO6 policy is a named perils policy that covers your personal possessions and belongings. As a result, it will only pay for your belongings to be damaged by the specified dangers listed in the policy.
What is an HO3 POLICY?
An HO3 policy is a normal homeowner’s insurance and protects your house from the most common risks, such as fires, windstorms, theft, and vandalism. HO-3 policies offer six different types of insurance:
- Dwelling: Covers your house’s walls, roof, and other structural elements.
- Additional structures: Covers detached garages, fences, and other constructions on your property.
- Personal Property: Protects your individual items such as clothing, gadgets, and furniture.
- Individual Liability: It offers financial coverage when you are held accountable for the injuries or property damages of another person,
- Extra Living Expenses: Covers costs associated with everyday living when your home is temporarily unavailable as a result of a covered loss, such as when your house is being repaired after a fire.
- Medical Payment: Pays for minor injuries received inside your home by an uninvolved third party (not always included).
HO3 vs. HO6: What Are the Main Differences?
- Insured Property: The main distinction between the two plans is that HO3 insurance was designed exclusively for a home, while an HO6 policy was made for a condominium.
- Personal Property Coverage: HO6 insurance policy is typically a wholly named peril policy, in contrast to the HO3 policy, which combines named peril and open peril coverage.
- Insured Property: Naturally, the physical structure of your home and other structures on the land are also covered by an HO3 policy. An HO6 policy only typically protects everything up to the walls of your unit; usually, it doesn’t cover any of the building things outside of your apartment.
- Reimbursement: With an HO6 policy, you can also choose to receive the Replacement Cost Value of your personal belongings, depending on the firm. The HO3 policy protects your personal property on a named peril basis and typically only reimburses you for the Real Cash Value of the stuff you’ve lost.
- Cost: The cost of the HO3 insurance policy is usually higher compared to the HO6 insurance policy.
Final Thoughts
There is no justification for not having condo or home insurance. Now that you know the distinctions between HO3 and HO6 coverage, it’s time to take action. However, whatever policy type you choose, keep in mind that your policy should be customized to your particular scenario and appropriate for your house and personal possessions.
If you need assistance finding the best HO3 or HO6 homeowners’ insurance coverage for an affordable price, contact ZK & Associates, and we will be ready to help.