When buying a new home, many people don’t give much thought to their homeowners insurance policy beyond making sure they have one and they get a fair price.
What you might not realize is that the homeowners insurance choices you may face go far beyond the deductible or whether the insurance company has an easy-to-use mobile app. Depending on the type of property you’re buying and where you live, you may have different insurance options to choose from—and these can affect the type of coverage you can receive in the event of property damage or other emergencies.
Here’s an overview of the different types of homeowners insurance in Missouri, including what residents should consider when choosing between different policy options.
Standard Home Insurance
Also known as an HO-3, this is the most common type of homeowners insurance policy used by single-family homes. This policy provides coverage for “all risks” your home may face, with a few important exceptions.
For most homeowners, a standard home insurance policy offers adequate coverage for both the property and your belongings. Most insurers also allow you to increase coverage levels for specific aspects of your property, giving you flexibility to make sure the policy meets your unique coverage needs.
Basic Home Insurance
This is the most limited insurance option for a single-family home. Though it meets the legal requirements of homeowners insurance, it only covers specific types of property damage. Some of the notable exceptions to this coverage include losses resulting from fire or theft.
For this reason, basic home insurance—also known as an HO-1—is rarely used. If something happens to your home, you won’t be as well compensated for your losses as you would with other types of home insurance policies.
The coverage amount is also only for the cash value of your lost property, not the replacement cost—which means your reimbursement could fall well short of what you would need to replace your belongings.
Broad Home Insurance
An upgrade over basic home insurance, this type of policy covers your home for its replacement cash value and your personal property at its cash value—rather than the cost to replace those items.
This is more affordable but more limited in coverage than a standard homeowners insurance policy, and it is more popular than basic coverage. For homeowners concerned about the cost of standard insurance, this might offer a compromise when compared to basic home insurance options.
Renters insurance provides coverage for personal items within your rental, as well as liability coverage if found responsible for damage to the property itself.
As the name suggests, renters insurance is intended for individuals renting a unit from a landlord. Renters insurance in Missouri is widely available through many of the same companies that offer home insurance.
This type of insurance offers the best possible insurance coverage for your home. It provides coverage for both your home and personal property at replacement value for both, rather than the actual cash value.
Comprehensive homeowners insurance, also known as an HO-5, also allows for insurance coverage for certain high-value items, such as jewelry. If you want premium coverage and are willing to pay a premium price, comprehensive insurance may be the right fit for your home.
Other Types of Home Insurance
For certain types of properties, specialized home insurance policies may be required. These policies are designed for condos, mobile and manufactured homes, and older homes with historical significance or other unique characteristics.
If you aren’t sure whether you need one of these types of home insurance, an insurance company will be able to tell you whether your home is best covered by a specialized policy.
As you seek out the best insurance policy for your home, remember that if your coverage needs or goals change, you can always change your policy in the future—either by changing your coverage levels with your current provider or by switching to a different type of policy altogether.
Discover more tips and insights regarding homeownership—download The Essential Guide for First-Time Home Buyers today.