What You Need to Know
What is Homeowners Insurance?
Homeowners insurance is a comprehensive policy designed to protect both your home and your liability. It’s a package policy or multi-line policy that offers two main types of coverage:
- Property Insurance (Section I)
- Liability Insurance (Section II)
By combining property and liability coverage into one policy, homeowners can avoid gaps in coverage and potential overlaps that might occur with separate policies.
Together, they form the Homeowners Policy, a smart financial decision for safeguarding your most valuable asset.
Eligibility for Homeowners Policies
Not every person or home qualifies for homeowners insurance. To be eligible:
- The named insured must be the owner-occupant of the dwelling, condominium, or a renter with residential occupancy.
- Coverage is allowed for one- to four-family dwellings with limited boarders or tenants.
- Farm dwellings are not eligible, but mobile homes are, with the appropriate endorsement.
- The home must be used primarily as a residence, with certain incidental business uses like home offices allowed.
Types of Homeowners Policies
There are various forms of homeowners policies, each designed for specific needs. All policies provide identical liability coverage (Section II), but property coverage (Section I) varies.
| HO Form | Coverage A: Dwelling | Coverage B: Other Structures | Coverage C: Personal Property | Coverage D: Loss of Use |
| HO-8 Modified | Basic (ACV) | Basic (ACV) | Basic | Basic |
| HO-2 Broad | Broad | Broad | Broad | Broad |
| HO-3 Special | Special | Special | Broad | Special |
| HO-5 Comprehensive | Special | Special | Special | Special |
| HO-4 Renters | N/A | N/A | Broad | Broad |
| HO-6 Condo | Broad ($5,000) | N/A | Broad | Broad |
- HO-2, HO-3, HO-5: For owner-occupied homes.
- HO-4: For renters; it covers personal property and liability.
- HO-6: Designed for condo owners, covering interior walls and personal property.
Homeowners Policy Coverages (Section I – Property)
- Coverage A: Dwelling
- Coverage B: Other Structures
- Covers detached structures like sheds or detached garages.
- Coverage C: Personal Property
- Provides protection for personal belongings anywhere in the world.
- Special Limits apply to high-value items like jewelry, firearms, and electronics.
- Coverage D: Loss of Use
- Covers additional living expenses if your home becomes uninhabitable due to a covered loss.
Perils (Risks) Insured Against
Homeowners policies offer coverage against various named perils, which differ based on the policy form.
- Basic Perils (HO-8): Fire, lightning, windstorm, hail, explosion, smoke, vandalism, theft, etc.
- Broad Perils (HO-2, HO-4, HO-6): Includes all basic perils plus additional coverage for falling objects, freezing pipes, and more.
- Special Perils (HO-3, HO-5): Covers all risks of direct physical loss, except those specifically excluded.
Additional Property Endorsements
Sometimes, homeowners have special needs that require additional coverage. Several endorsements are available:
Sometimes, homeowners have special needs that require additional coverage. Several endorsements are available:
- Scheduled Personal Property Endorsement
- Protects valuable items like jewelry, fine art, or collectibles with a separate schedule and enhanced coverage.
- Personal Property Replacement Cost Endorsement
- Reimburses losses at replacement cost rather than actual cash value.
- Earthquake Endorsement
- Adds coverage for damage caused by land movement, including earthquakes and volcanic eruptions.
Homeowners Liability Coverages (Section II)
Coverage E: Personal Liability
Personal Liability
- Protects against legal liability for bodily injury or property damage caused to others.
- Coverage extends to non-business activities worldwide, with a base limit of $100,000.
Coverage F: Medical Payments to Others
Medical Payments to Others
Pays medical expenses for injuries to guests on your property, regardless of fault. Coverage is typically $1,000 per person but can be increased.
Limits of HO-4 & HO-6 Policies
- HO-4 (Renters Policy): Covers renters’ personal property on a broad named perils basis, but not the structure itself (which is covered by the landlord).
- HO-6 (Condo Policy): Covers condo owners, insuring the interior walls and built-in components like cabinetry.
Additional Liability Endorsements
- Watercraft Endorsement
- Expands liability coverage to include watercraft powered by motors or sails.
- Business Pursuits Endorsement
- Provides liability protection for business conducted away from home.
- Personal Injury Endorsement
- Covers non-bodily injury claims like libel, slander, and invasion of privacy.
FAQ
Q: Do I need homeowners insurance if I own my home outright?
Yes! Homeowners insurance protects your home and personal assets from unexpected events like fire, theft, or lawsuits.
Q: Does homeowners insurance cover flood damage?
No, flood insurance is typically a separate policy. You can purchase it as an add-on or through the National Flood Insurance Program.
Q: What is the difference between ACV and Replacement Cost?
Actual Cash Value (ACV) covers the depreciated value of your property, while Replacement Cost pays the full amount needed to replace your items.
Q: Are my belongings covered if I’m not home?
Yes, homeowners policies provide worldwide coverage for personal property up to a specific limit.
We are Here for You!
Armor Insurance Agency is here to help you navigate home insurance in Montana.
Whether you need coverage for your home, rental, or condo, contact us today to get a tailored policy that protects what matters most!