An HO-6 is a condominium policy. It provides coverages similar to a renter's policy (see example 4) since the limit chosen is based on the value of the owner’s personal property or contents. An HO-6, however, also provides coverage for that part of the dwelling that belongs to the condominium owner. This includes alterations, appliances, fixtures and improvements that are part of the building or are contained within the building.

An HO-6 also covers property that is the condominium owner's responsibility to insure under a corporation or association of property owners agreement. In this type of policy both the dwelling and the contents are covered against named perils.

Following a covered loss to the contents, settlement is made on the basis of actual cash value. A loss to the dwelling is made on a replacement cost basis.

The amount of coverage on the face of this policy is $50,000. However, the amounts in coverages A and D through G (see page 5) are provided in addition to the amount that would be paid for loss of the contents.

If the insured in this example suffers a loss of $50,000 to personal property, and $5,000 to the part of the dwelling that the insured owns, he or she could collect $55,000 plus additional living expenses, if necessary.

 

This type of policy provides an amount of coverage on the dwelling that is limited to 100 percent of the value of the home on the open market. In this example that amount would be $50,000. Under a market value policy, both the dwelling and contents are covered against named perils.

A covered loss to the dwelling is settled on a repair cost basis up to the maximum limit of the policy. This is why it is sometimes referred to as a "repair cost policy." Covered property losses are settled on the basis of actual cash value.

The replacement cost of the home in this example is $100,000. An insured may not want or need to purchase $100,000 of coverage on a house with a market value of only $50,000. For this reason, a market value policy may be a more reasonable option than a replacement cost policy.

Also, some insurers do not want to insure a home on a replacement cost basis when the replacement cost is considerably larger than the market value of the property. This is because in the event of a total or near-total loss the policyholder could receive a settlement amount much greater than the home's actual worth. If an insurer does not offer a replacement cost policy for this reason, the insurer must offer a market value policy.

The amount of coverage on the face of this policy is $50,000. However, the amounts in coverages B through G (see page 5) are provided in addition to the amount that would be paid for loss to the building. If the insured suffers a loss of $50,000 to the building, $15,000 to the contents and $3,500 to the garage, he or she could collect $68,500.

Under an HO-3, the dwelling is covered against all risks or perils except those specifically excluded in the policy and the contents are covered against named perils. A loss to the dwelling is settled on a replacement cost basis. Personal property losses are settled on the basis of actual cash value.

Because an HO-3 provides coverage against all types of risks to the dwelling except for those specifically excluded in the policy, it is sometimes considered to be a “deluxe” policy. Depending on the company, the policy may have some special added coverages or limits. In order to purchase this type of policy, the insurer may require an insured to purchase an amount of coverage equal to at least 70 percent of the homes full replacement cost.

The amount of coverage on the face of this policy is $100,000. However, the amounts in coverages B through G (see page 5) are provided in addition to the amount that would be paid for loss to the dwelling.

If the insured in this example suffers a loss of $100,000 to the dwelling, $40,000 to the contents and $7,000 to an unattached garage, he or she could collect $147,000 plus additional living expenses, if necessary.

A person who doesn't own the building, but wants liability protection and comprehensive protection against loss to personal property in a rented living space can be insured under an HO-4 policy.

An HO-4 does not provide coverage on the building or appurtenant structures, but provides other coverages similar to a homeowners policy. Personal property is covered against named perils and personal property losses are settled on the basis of actual cash value.

The amount of coverage on the face of the policy is $40,000. The amounts in coverages B through G (see page 5) are provided in addition to the amount that would be paid for loss to the contents.

For example, if the insured suffers a loss of $20,000 to his or her personal property, he or she could collect $20,000 plus an amount necessary, up to the policy limit, for additional living expenses.