Explained: Covered Peril & Home Insurance
While you might be aware of how Long Island homeowners insurance provides financial protection against damage to your investment, it's also essential to understand the specific benefits of your policy. First of all, the right type of insurance for you depends on your home structure and how much coverage you need.
Each home insurance policy type or form is standardized, and the fine print typically outlines which part of your property is included or excluded as well as the perils that are covered. Covered peril in home insurance means the different types of damage the insurance company will reimburse you for. Perils are hazards, events, sources of injury, or risks that cause damage or loss.
So for covered perils, the insurance company will pay for any damage or loss caused by that peril once you submit a claim. There are three main types of forms to choose from regarding covered perils and homeowner insurance. Remember that all home insurance forms conform to ISO (Insurance Services Office) standards despite different branding or extra coverage. Therefore, the basics are the same for each form type in terms of what it covers and how it works.
HO-1 Home Insurance Policy - Basic Form
This basic form policy only has the following covered perils:
l Fire or lightning
l Volcanic eruption
l Windstorm or hail
l Vandalism and malicious mischief
l Riot or civil commotion
l Breakage of glass constituting part of the building
The insurance will only pay for those explicitly mentioned perils, so earthquakes, floods, and falling objects are out. This policy is also referred to as a named perils policy because it expressly states the covered perils. Additionally, some policies will only cover the structure minus any of its contents.
This type of "bare bones" coverage is usually more expensive since it often applies to high-risk properties that are not eligible for more coverage. It's also no longer available in some states.
HO-2 Home Insurance Policy - Broad Form
An HO-2 policy is more generous than an HO-1 policy. On top of what's covered by the HO-1 policy, it covers some of the following perils:
l Falling objects
l Weight of snow, sleet, or ice
l Malfunction of electrical appliances, plumbing, heating, or air conditioning systems
While the policy covers your property's contents, it also only covers perils that are specifically listed in the policy (named perils coverage).
HO-3 Home insurance Form - Special Form
An HO-3 policy is more popular among homeowners since it's more comprehensive. When it comes to your property, it covers almost any peril except those that are specifically excluded. This policy is called an open peril or an all-risk policy. Generally, an HO-3 policy includes coverage for:
l Your property - Dwelling coverage protects you from damage to your home and other structures on your property, such as sheds, driveways, and fences.
l Your personal belongings - For personal belongings, an HO-3 form applies the named perils policy of HO-1 and HO-2 forms, meaning it will only cover perils mentioned explicitly in the policy. Additionally, you might need extra coverage for valuable belongings like art and jewelry.
l Additional living expenses - Under "loss of use," the insurance company might pay for your living expenses if you can't stay in your home due to damage or loss.
l Personal liability - You have cover for unintentional damage, loss, or injury to others caused by you.
Perils that are excluded in an HO-3 form vary, but standard exclusions include:
l Nuclear accidents
l Intentional damage or loss
l Government action
You can add some of these perils to your Long Island homeowners policy if you're willing to pay for extra coverage. But others like floods and earthquakes will require a separate policy. You can also consider an HO-5 policy wihch is similar to the HO-3 but typically adds additional perils of loss to your contents coverage.