Home insurance is offered in several different forms with three different cause of loss options. An HO-1 policy is a type of insurance form and possesses basic cause of loss coverage, as opposed to broad or special coverage. This means that your coverage is going to be very limited and will only cover damage that results from a few perils. This might seem like an attractive option when you are looking at home insurance policies because it’s likely the cheapest but you may find yourself paying in the long run. While some of the things that an HO-1 homeowner’s policy covers have a good chance of happening, the coverage with a more comprehensive form will work better to your advantage. This can mean you might be stuck with an extremely high bill for a damaged house if your claim isn’t covered.
Coverage Offered by HO-1 Home Insurance
An HO-1 policy normally only covers around 10-11 different forms of damage but as you can see below, some are more likely to happen than others. The different types of damages that are covered are as follows:
- fire or lightning
- wind or hail
- riot or civil commotion
- vandalism or malicious mischief
- volcanic eruption
If your house catches on fire or is struck by lightning, the cost that it takes to repair it will be covered by your policy. The insurance company will need to determine that the fire was accidental before they pay out any claim money. Also, if there’s any smoke damage, you will also be covered.
Surprisingly, hail is one of the most destructive forms of weather and we’ve all seen the wrath that a tornado can wreck on a house. Both types of weather are going to be covered but make sure that you report them as soon as you can to get started on the claims process.
Explosion might seem like an odd thing to add to a homeowner insurance policy but if it’s on there, it’s likely someone tried to claim it. If you’re building bombs in your basement, your insurance company probably isn’t going to cover your claim but if your neighbors gas heater explodes and takes out a portion of your kitchen, you can collect against their insurance as well as yours if you need to.
So what are the chances of your house being damaged during a riot or civil commotion? It’s always good to be prepared no matter what, but realistically your pipes are going to burst before a riot breaks out in front your suburban street. Since HO-1 was one of the policies originally developed for homeowner’s during the 1950’s, you can see where riot and/or civil commotion may have been a plausible cause of loss during those days.
Normally, you will see planes in the sky but if you see one come through your window, run first. Then call your insurance company. It’s not unheard of to turn on the news and see small passenger plane sticking out of someone’s house. If that happens to you, you will become very close with your insurance company. The same goes for a car. Occasionally, people will get drive and reverse mixed up or they’ll hit the gas when they mean to hit the break. The same rules apply. Run and call your insurance company.
Obviously some of those are going to be more common than others but all that means is the likelihood of your claim being denied is higher. This form of insurance does not have personal liability coverage. Exclusions include flood and earthquakes. Because this coverage is so basic, many states have even stopped offering it.
Vandalism, malicious intent, and thievery are hopefully things you don’t ever have to deal with. Individuals that live in more crime ridden areas may have to deal with this more than gated communities but you should never let your guard down just because of your address. At least with an HO-1 policy, you’re covered.
And for the last coverage form, we come to volcanic eruption. While it’s normally a good rule of thumb to not buy your personal property close to a volcano, sometimes you just can’t help it. Make sure that your HO-1 policy includes appropriate amounts of coverage if your house and all its belongings get swept away in a river of lava.
You will notice that floods and earthquakes are not included and if you need that coverage, you will want to purchase add-ons to your plan to make sure you’re taken care of. Always opt for replacement coverage rather than actual cash value. That way, if any of the above perils happens to your property you will receive the original cost + inflation. If your house is damaged significantly, your insurance money could be exactly what you needed to make your house a home again.