If you’re having a hard time finding the type of insurance that you feel would be right for you, you are not alone. Millions of homeowners each year take to the internet to shop their insurance rate, or to just try to find out exactly what their home insurance is protecting them from. One of the most common questions homeowners have is about the different home insurance policy types. The home policy form that most homeowners seem to be confused about is the HO8.
The HO8 home insurance policy is a very basic home insurance policy. It typically will insure the home at market value. This means that the home is not insured at replacement cost. Replacement cost is the best type of insurance coverage available, because if you have replacement cost coverage, and your home gets damaged, your home will be repaired with nothing more than your deductible out of pocket. This is not always the case with homes insured at market value.
Market value home insurance policies take depreciation into account when evaluating damage done to a home. This means, like your car insurance, your home insurance company will deduct depreciation from the amount of money you can claim. This can be quite bothersome for many homeowners because it may mean that in order to repair the home to the state it was in previous to the accident, the homeowner may have to come up with a significant amount of money out of pocket. Although replacement cost can be added to some HO8 insurance policies, it typically does not come standard.
The other disconcerting element about the HO8 is that it will only protect your home and contents from very basic perils; fire, windstorm, vandalism, theft (although theft is usually restricted to a low sum in this policy), and a few others. No protection from water damage of any kind is included. Falling object coverage is also not included, unless caused by a windstorm. Simply put, the HO8 policy gives the homeowner the least amount of protection.
Most people only purchase HO8 insurance if extenuating circumstances don’t allow them to purchase a better policy. One reason may be that the home is so old and the construction materials are so different, most insurance companies don’t want to run the risk of having to repair it. Another reason may be the serious amount of claims in an area make it difficult to get a better type of insurance. Whatever the reason may be, most homeowners would be wise to look for a HO2, HO3, or HO5 home insurance policy before they purchase the HO8.