Homeowners insurance is the most common type of household insurance; it covers both the structure and the contents, or your personal belongings. There are many varieties of homeowners insurance, offered by many companies, with different types of coverage for different areas and situations. There are special policies, for instance, for condo owners or renters, whose coverage needs are different from individual homeowners. Homeowners policies are classified with numbers or letters. A common form is HO3 or HOB, an adaptation of the HO3 policy. HOB is the common designation in Texas and other states.
An HOB policy is a hybrid, with elements of "open peril" and "named peril" coverage. Open peril coverage does not specify perils or dangers for which you are insured but rather lists exclusions, things for which you are not covered. Named perils are dangers against which you are specifically covered. An HOB is open for structures, named for personal property.
An HOB policy covers a house against most types of damage. It specifically excludes such things as earth movements, power failures, war or nuclear accident, vandalism, sinking foundations and wear and tear or deterioration. It also generally includes some protection against water damage, important in Texas and other coastal states. Earthquake protection is often purchased in California.
An HOB policy covers your personal property against 16 named perils. These include such things as fire or lightning, wind or hail, smoke, explosion, civil disturbance, falling objects, weight of snow or ice or overflow of water or streams. It also protects against theft or vandalism.
The amount of coverage varies with the value of your house. Personal property coverage is usually based on a percentage of the home value, typically 40 percent. A $100,000 house policy, for example, would have $40,000 of personal property insurance. Some companies and some lenders require you to insure for the full replacement value of the house.
HOB policies usually cover accessories, such as lawn mowers or garden tractors or boats and boat trailers and similar devices when on the premises. It also covers such things as credit cards, securities or precious metals, furs or jewelry, but usually with special limitations on dollar coverage.
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