It can be confusing trying to figure out what kind of insurance policy you need to protect your property. Your insurance agent should ask lots of questions and use her expertise to select the correct policy type for your home and your situation. Here in Florida, there are six common policy forms: HO-3, HO-4, HO-6, HO-8, DP-1 and DP-3.
HO-3
The HO-3 Policy Form is the standard, owner-occupied Homeowners Insurance form. If you own your own single-family home and you live there full-time, this is probably the kind of policy that you have. HO-3 policies provide coverage for the building, its contents and the detached structures on the property, plus coverage for liability and for additional living expenses if you need to stay elsewhere when your home is damaged.
HO-4
The HO-4 Policy Form is for renters. Whether you rent a house, an apartment or a condo, your landlord’s insurance policy only covers the building itself, not your personal property. This means that if anything happens to the home, your belongings will not be insured unless you have an HO-4 policy. This type of policy is typically very inexpensive and though not all landlords require it, the investment is usually worth it.
HO-6
The HO-6 Policy Form is for condo unit owners. If you live in a condo, the condo association insures only the roof and the building’s exterior walls. You need coverage for the interior structure of your unit (often called ‘drywall-to-drywall’ or ‘from the studs in’). This includes coverage for the ceilings, walls, floors, and fixtures. An HO-6 policy also provides coverage for contents, liability and additional living expenses. Most condo policies will allow you to add an endorsement that permits you to have tenants in your condo. You’ll hear this type of policy called an ‘HO-6 Rental’.
HO-8
The HO-8 Policy Form is generally to be avoided. It’s a very limited policy, only covering 10 named perils and only insuring the home for its Actual Cash Value (as opposed to Replacement Value on other policy forms). The HO-8 was designed for older homes and historic homes whose Market Values highly exceed their Replacement Values. HO-8s are rarely written if an HO-3 policy is available for the home. PLEASE BE CAREFUL! There are agents out there who will present an HO-8 Policy as a ‘regular Homeowners policy’ and not tell you its limitations.
DP-1 and DP-3
The DP Policy Forms are for landlords. Folks who rent out their properties need the same basic coverage as other homeowners: building, contents, detached structures and liability. In addition, the DP forms also include coverage for lost rental income resulting from damage to the property. If you own a home, and there’s a tenant in it, you must have a DP policy to be properly covered.
There are a couple of differences between the DP-1 and the DP-3 Forms. The DP-1 is similar to the HO-8 in that there are certain perils it doesn’t cover and it only insures the home for Actual Cash Value. The DP-3 is similar to to HO-3 in that it covers a much wider range of perils and insures the home for its full Replacement Value. The DP-1 is attractive to some landlords who are looking for a cheap policy with very basic coverage and who might otherwise choose not to insure their investment homes. In general, the DP-3 is the form most chosen.
There are other types of home insurance but these six forms are the most common. The majority of agents are knowledgeable and honest, and will make sure that your policy accurately reflects your property and your situation. Even so, please be informed as a consumer and just double-check your policy. Ask your agent if you have questions, or please contact us.
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