Tom's Blog
Picking out the home of your dreams is exciting, but finding the right insurance protection for your dream home may feel more like a nightmare if you don’t know much about home insurance policies. Your home investment may be your biggest investment yet, so the insurance needs to be custom built to meet all of your home needs, within a budget you can afford. Learning the differences between HO3 and HE7/21 home insurance policies is a step in the right direction towards having the home protection you deserve.
The Coverage of Your N.C. Home Insurance Policy Matters
When you are insuring your dream home, you may think a bare-boned insurance policy is adequate, without considering all of the situations that could happen that may leave you in dismay and financial ruin AFTER the fact, when it’s too late. The time to purchase an all-encompassing insurance policy is BEFORE the accident happens, not after.
Below Are Some of the Main Differences Between the HO3 and the HE7/21, but Not Limited to:
1. A standard N.C. homeowners insurance policy provides coverage for your home as well as for liability, but what about personal liability? Personal liability includes things like libel/slander, wrongful eviction, false arrest and false imprisonment. The HO3 insurance policy does not provide personal liability coverage; however the HE7/21 does. You may not consider this to be anything you may need in the future, but you may be surprised! Unfortunate situations happen all the time and if you find yourself in one of them, you will be delighted to have this type of coverage.
2. The HO3 is a basic insurance policy when it comes to covered losses and the protection of your personal belongings. Under an HO3 policy, your belongings are covered based on “named perils”, specifically outlined, however, the HE7/21 provides a more broad type of coverage. With the HE7/21, your personal belongings are covered, unless otherwise specifically excluded.
3. Both home insurance policies outline specific items (such as fur, cash, antique, rare coin collections, guns, silver) that have a limited amount of coverage, should a covered loss occur. The biggest difference is that with the HO3, there is a lower amount of coverage versus with the HE7/21. Let’s say that someone breaks into your home and steals $1000 in cash and all of your fine jewelry that is estimated to be $15,000. The HO3 has a limit of $200 for cash, yet the HE7/21 would reimburse you for the full amount of $1000. As for your stolen jewelry, you would receive a reduced amount under the HO3 in comparison to the HE7/21.
*Talk to your N.C. independent insurance agent about having some of your high value ticket items (such as jewelry), scheduled under an endorsement that would provide the true value of these items and not the specified amount cited on the homeowners insurance policy.
4. Both home insurance policies provide coverage for Loss of Use. Let’s say that your house catches fire, leaving you without a place to live while the repairs/restoration are being done. Loss of Use states that your living expenses will be covered during the process of restoration and ends when the repairs are complete. However, the HE7/21 also pays your mortgage for the home that was damage/destroyed while you have to live elsewhere.
5. Under the HO3, sewer and drain backup is excluded, unless you purchase an add-on endorsement that adds it back to your coverage. However, the HE7/21 has the coverage built into the policy, so if you go out of town and come home to a complete mess due to sewer and/or drain back up, the HE7/21 will automatically pay up to $20,000 for damages. Coverage for this type of thing never felt so good, if you have ever experienced this type of loss.
Keep in mind there are other differences between the two homeowners insurance policies, but knowing the above listed differences may help you choose the type of insurance that best suits your home, family and budget. One rule of thumb regarding home insurance is to always get the best insurance you can afford to buy; otherwise you may be exposing your home and your family assets to financial devastation. Feel free to contact our office at 866-869-3335 with any questions you may have regarding N.C. homeowners insurance protection.
