Prior to the 1950s, there used to exist separate policies for the
various damages that could affect a real estate property or home in
particular. A home owner was hence forced to purchase separate
policies covering losses arising from fire or theft of the personal
property and so on. However, during the 1950s, policy reforms were
developed, allowing the home owner to purchase all the insurance
they needed under one complete policy.
These policies of course varied across insurance companies, and
their fine print was difficult to comprehend most of the time. The
need for standardization hence became so great a requirement that a
private company based in Jersey City, New Jersey, known as Insurance
Services Office, also known as the ISO, was created in the year 1971
to provide risk information related to home insurance and issued a
simplified homeowners policy that was available for resale to
insurance companies. These policies have been amended over the years
and until recently the ISO had six standardized homeowners insurance
forms that are in general and consistent use. Of these the form
known as the HO-3 is the most common policy, and this is followed by
HO-4 and HO-6 in terms of popularity. The other policies that,
though less used are still significant are the HO-1, HO-2 and HO-5.
Each is these policies have been summarized below:
HO-1 is a limited policy that offers varying degrees of coverage
but only for items specifically mentioned in the policy. These might
be used to cover a highly priced object found in the home, such as a
painting or an artifact of antique value.
Similar to the HO-1, HO-2 is a limited policy in the sense that
it covers only specific portions of a house against damage. The
coverage is usually a 'named perils' policy, which lists the events
that may cause damage that would be covered. Similar to HO-1, these
factors are generally listed out in the policy.
This is the most common policy that is written for most home
owners and is designed to cover almost every aspect of the home, the
structure and its contents as well as any 'wear and tear' that may
arise from daily use of the premises as well as any visitors who may
encounter an accident or injury while on the premises. The aspects
that are covered as well as the limits of liability, if any, are to
be clearly spelled out in the policy to ensure good coverage. The
coverage this type of a policy offers is usually called an 'all
risk' or else an 'open perils' policy.
This type of a home insurance policy is commonly referred to as
renter's insurance or renter's coverage. Similar to the HO-6 policy,
this one covers those aspects of the (rented) apartment and its
contents that are not specifically covered by the blanket policy
written for the complex. This policy can also be used to cover
liabilities arising from accidents and intentional injuries caused
for guests as well as passers by up to a limit of 150' of the
This policy is similar to HO-3 and covers only a home but not a
condominium or an apartment. The homeowner and its possessions as
well as any liability that might arise from visitors or passers-by
are also covered. This coverage is differentiated in the sense that
it covers a wider breadth and depth of incidents and losses as
compared to what an HO-3 policy offers.
This policy is a form of supplemental home owner's insurance and
the HO-6 is also known as a Condominium Coverage. This policy is
designed especially for the owners of condominiums and it includes
coverage for the parts of the building owned by the insured and for
the property of the insured that is housed within. Being designed to
bridge the gap between what the home owner's association might cover
in a blanket policy written for an entire building and those items
of importance to the insured, generally the HO-6 policy covers
liability for residents and guests of the insured apart from any
personal property. The liability coverage, depending on the
underwriter, as well as the premium paid apart from other factors
listed in the policy, can cover incidents up to a limit of 150' from
the insured property, including all valuables within the home from
theft, fire or water damage or any other form of losses. It is
important to read the Associations By-laws in order to determine the
total amount of insurance required on your dwelling place.
This policy is designed especially for mobile home owners.
This is usually called 'older home' insurance and it lets home
owners with higher replacement cost than the market value insure
their premises at the lower market value rate.