What Is Basic Homeowners Insurance Coverage?

Insurance is your seat belt as you make your way through life. It cannot stop unforeseen circumstances, but it can keep you from being flung from the car. Homeowner's insurance protects you and your mortgage lender from loss in the event your home is damaged or destroyed by such things as windstorms, fires and lightning strikes.

Basic homeowner's insurance provides a minimal level of coverage for your home and your belongings. This type of coverage is in your best interest, as it will help you recoup your losses in the event of damage to your property. Additionally, it may protect you from the loss of assets in the event a guest is injured in your home.

What's more, it often is mandatory. Mortgage lenders typically require borrowers to obtain this type of coverage as a home-financing condition.

An HO-1 homeowner's insurance policy provides the most basic coverage. It typically covers damage caused by about 10 different events, including fire, lightning, windstorms, hail and explosions. An HO-1 policy usually covers smoke damage, explosions, damage caused by civil unrest and volcanic eruptions as well. This type of policy is very limited, and many states no longer offer it.

An HO-2 policy is a basic type of homeowner's policy that provides somewhat broader coverage. This policy will cover you against about 16 different types of events, including not only fire and lightning but also damage from theft, vandalism and riots. It covers damage from hail, windstorms and breaking glass as well as smoke damage and damage that is caused by a car, truck or airplane. In the event you're unlucky enough to have pipes that burst, a heating unit that ruptures or a roof that collapses under the weight of snow, this type of basic policy will cover it.

Many homeowners prefer to purchase an HO-3 policy because it covers all possible causes of damage to your property and possession loss, with the exception of those specifically listed as excluded. The exclusions will vary from policy to policy, and you should read yours carefully to understand what is left out.

Basic homeowner's policies typically cover not only the costs to repair damaged property but also replacement costs in the event that your entire home is destroyed. Usually, a basic homeowner's policy will also cover your belongings, including furniture and appliances. Typically, however, the contents of your household are only covered for 40 to 75 percent percent of the building's value.

Basic homeowner's insurance policies usually don't cover things like earthquakes and floods. Some may only provide limited coverage for the loss of personal property like jewelry, computers and cameras. To make sure you have enough coverage for this type of property, you can purchase additional insurance.