Now for more “insurance lingo” explanations
Nowadays, the typical Homeowner’s policy comes in two basic forms, an HO-2 and an HO-3. For better or worse, an HO-3 policy is referred to in the business as an “All Risk” policy. This is really a misnomer because it does not cover everything that can happen to your house. And it’s a little misleading, since floods are not covered. In contrast, an HO-2 policy is a “Named Peril” policy. Stay with me here, because it gets confusing. I think they do it on purpose.
HO-2 or “Named Peril” policy says that if any of the following perils happen, they will consider it a claim:
- Riot/civil commotion
- Vandalism/Malicious Mischief
- Glass Breakage
- Pipe Freezing
- Volcanic Eruption
- Falling Objects
- Weight of Ice, Sleet, Snow Collapse
- Electric Current
This seems like it covers just about everything that could possibly happen to a home. It isn’t. Flood, earthquake and ice dams are just a couple of perils that the HO-2 policy does not cover. The important concept here is that the events are named. Hence, it is a “Named Perils” policy.
The HO-3 “All risk”policy, on the other hand, focuses on “exceptions.”
It should have been called the “Named Exclusion” policy instead of “All Risk,” because it causes consumer confusion. An HO-3 policy covers you for all risk of physical loss except for the following:
- Ordinance of law
- Earth movement
- Governmental action
- Nuclear hazard
- Power failure
- War / military action
- Water (Flood)
- Inherent defects
Not sure what type of policy you have? Call your agent and ask them whether you have an HO-2 or HO-3 policy. The best policy is an HO-3 because it is an all-risk policy. It is my professional opinion that many homeowners already have an HO-3 policy. If you have an HO-2, simply request a policy change to an HO-3 or find another company that will do this for you.
Need a suggestion on a good insurance company? Call our office at 215 641-6000 for recommendations. Or see my “best and worst” insurance companies list based on 30 years of experience working with insurance companies.
I am an advocate for my clients. Call if you have:
- Any questions about your insurance policy and want an unbiased view
- Any questions about a claim (whether settled or not)
- Advice for reporting a claim (call me first)
Warm regards for a “hassle free” winter,