Apple Financial Services

Homeowners Insurance Information

Are there different types of policies?

Yes. A person who owns his or her home would have a different policy from someone who rents. Policies also differ on the amount of insurance coverage provided.

The different types of homeowners policies are fairly standard throughout the country. However, individual states and companies may offer policies that are slightly different or go by other names such as “standard” or “deluxe”.

The chart below lists the disasters that are general coverage areas for the following types of policies†:

	Dwelling & Personal Property		Dwelling	Personal Property			Dwelling & Personal Property
Perils	Basic HO-1+	Broad HO-2	Special HO-3	Special HO-3	Renters HO-4	Co-op/ Condo HO-6	Modified Coverage HO-8
1. Fire or lightning	♦	♦	♦	♦	♦	♦	♦
2. Windstorm or hail	♦	♦	♦	♦	♦	♦	♦
3. Explosion	♦	♦	♦	♦	♦	♦	♦
4. Riot or civil commotion	♦	♦	♦	♦	♦	♦	♦
5. Damage caused by aircraft	♦	♦	♦	♦	♦	♦	♦
6. Damage caused by vehicles	♦	♦	♦	♦	♦	♦	♦
7. Smoke	♦	♦	♦	♦	♦	♦	♦
8. Vandalism or malicious mischief	♦	♦	♦	♦	♦	♦	♦
9. Theft	♦	♦	♦	♦	♦	♦	♦
10. Volcanic eruption	♦	♦	♦	♦	♦	♦	♦
11. Falling object		♦	♦	♦	♦	♦
12. Weight of ice, snow, sleet		♦	♦	♦	♦	♦
13. Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler systems, or from a household appliance.		♦	♦	♦	♦	♦
14. Sudden and accidental tearing apart, cracking, burning, or bulging of a steam heating system, and air conditioning or automatic fire-protective system.		♦	♦	♦	♦	♦
15. Freezing of a plumbing, heating, air conditioning, air conditioning or automatic fire-protective sprinkler system, or of a household appliance.		♦	♦	♦	♦	♦
16. Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component).		♦	♦	♦	♦	♦
All perils except flood, earthquake, war, nuclear accident, landslide, mudslide, sinkhole and others specified in your policy. Check your policy for a complete list of excluded events.		♦
* HO-1, HO-2 and HO-3 refer to standard Homeowners Policies. +HO-1 had been discontinued in most states.
†This list is for educational purposes only, and is not representative of available Apple Financial Services’ homeowners policies. For a complete list of homeowners policies available through Apple Financial Services, click here.

If you own your home

If you own the home, policy homeowners policy options can be classified as the following. The most popular policy used by insurers is the HO-3, which provides the broadest coverage. Owners of multi-family homes generally purchase an HO-3 with an endorsement to cover the risks associated with having renters live in their homes.

HO-1: Limited coverage policy
This “bare bones” policy can cover you against the first 10 disasters. However, it is no longer available in most U.S. states.

HO-2: Basic poliy
This policy provides protection against all 16 disasters listed above; a version of the HO-2 ia also made available by some insurers for mobile homes.

HO-3: The most popular policy
This policy protects your home from all major home disasters except those specifically excluded by the insuring party.

HO-8: Older home
Designed for older homes, this policy usually reimburses you for damage on an actual cash value basis which means replacement cost minus the property's depreciation. Full replacement cost policies may not be available for some older homes.

If you rent your home

HO-4: Renter
This policy was created specifically for those who rent their home and are not specifically responsible for the dwelling itself. The policy can protect the renter’s possessions and any parts of the apartment that they own, such as new kitchen cabinets or appliances installed by the renter, against all 16 disasters listed above.

If you own or operate a co-op or a condo

HO-6: condo/co-op
For those who own a condo or co-op, this policy can provide coverage for the owner’s belongings and the structural parts of the building, i.e. the unit, that they own. It also can protect against all 16 disasters.

Your level of coverage

Regardless of whether you are an owner or renter, the following three options are generally available to you:

Actually cash value.
This type of policy pays to replace your home or possessions minus a deduction for depreciation.

Replacement cost.
The policy pays the cost of rebuilding/repairing your home or replacing your possessions without a deduction for depreciation.

Guaranteed or extended replacement cost.
This policy offers the highest level of protection. A guaranteed replacement cost policy pays whatever it costs to restore your home to its pre-disaster condition even if it exceeds the policy limit. This provides protection against sudden increases in construction costs due to a shortage of building materials after a widespread disaster or other unexpected situations. It generally won't cover the cost of upgrading the house to comply with current building codes. You can potentially, however, get an endorsement (or an addition to) your policy called Ordinance or Law to help pay for these additional costs. A guaranteed replacement cost policy may not be available if you own an older home.

Some insurance companies offer an extended, rather than a guaranteed replacement cost policy. An extended policy pays a certain percentage over the limit to rebuild your home. Generally, it is 20 to 25 percent more than the limit of the policy. For example, if you took out a policy for $100,000, you could get up to an extra $20,000 or $25,000 of coverage.

Even though a guaranteed/extended replacement cost policy may be a bit more expensive, it can offer the best financial protection against disasters for your home. These options may not be available in all states or from all companies, however. To learn more about the policies available to you through Apple Financial Services, click here.

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Reprinted with permission of Insurance Information Institute, Inc.