7 Home Insurance Coverage Differences You Need to Know Before You Have a Claim


Insuranceez?  That is what it sounds like to most people when you hear terms like HO3 and HE7/21. The terms refer to different home insurance policies available in North Carolina.  If you are like most people your home is the single biggest asset you will ever purchase.  You want to make sure you have it protected and covered with not just an average policy but the very best policy the market has to offer. O’Connor Insurance has partnered with insurance companies like Erie Insurance and Travelers that offer the HE7/21 because it is a more comprehensive home policy.  You should know that most insurance companies offer only an HO3 home insurance policy.  Don’t kid yourself into thinking it doesn’t matter which policy you have.  It will matter the most the only time you look at your insurance policy; when you have a claim.  That is where the rubber meets the road and the only time your home insurance coverage really matters.  To understand the difference between the two different homeowners insurance policies think of this analogy.  When you go car shopping you know there are a variety of car models from base to fully loaded.  The HO3 policy is a base policy and the HE7/21 is fully loaded.  In this case the best part is the fully loaded HE7/21 policy does not cost anywhere near as much as a luxury car.

Here are 7 coverage differences between the HE7/21 and the HO3 home insurance policies – coverages that could cost you thousands of dollars out of your pocket:

  1. Your personal belongings are covered based on comprehensive perils on an HE7/21 policy.  That means your belongings are covered unless there is a specific exclusion in the home policy therefore the coverage is much broader.   An HO3 policy covers your things based on named perils, which means there is a list of items that are covered making the coverage much more specific.  Here is an example of why having broader coverage is better:  Imagine you are doing a quick DIY project over the weekend and spill paint all over your dining room table and that beautiful new rug you just bought for under the table–accidents happen. The table and the rug would be covered by the HE7/21 but NOT covered by the HO3.
  2. On all home policies there are certain items that have limited amounts of coverage.  Some examples are theft of jewelry, guns, cash, furs…there are a few more but you get the idea. The HE7/21 limits for these items are higher than the HO3 policy.  On the HO3 you would have to pay an additional fee to get additional coverage for a lot of things you might have coverage for on the HE7/21.  Here is an example:  If someone breaks into your home and steals jewelry, the  HE7/21 would cover up to $5500 for all your jewelry (maximum per item is $1500).  The HO3 only covers $3000 total (maximum per item is $1,000).
  3. Lots of small business owners work from home these days.  Why pay for office space when you can use your spare bedroom?  On the HE7/21 you have up to $5,000 to cover your business property that is at your house.  So that fancy desk and new laptop you bought would be covered up to $5,000.  On the HO3 you would have just $2500 – barely enough to cover the desk let alone the laptop.  Another instance when you would have to buy additional coverage if you had an HO3.
  4. One other coverage that has a limit on the home policy is money.  Yep I am talking cold hard cash.  If you keep a little cash under your mattress for a rainy day the HE7/21 will pay up to $1,000 when your house burns down with the cash in it.  The HO3 will reimburse you just $200.  If you are one of those people that don’t believe in savings accounts and you keep more than $1,000 please purchase a fire resistant safe because you will only get $1,000 covered on your HE7/21 policy.
  5. All home policies have a coverage called Loss of Use.  Loss of Use provides living expenses if you are unable to live in your house because of a covered loss.  The HE7/21 would also pay your primary mortgage expense while you had to live elsewhere because of a covered insurance claim.  The HO3 does not.
  6. One of the most overlooked coverages is Sewer and Drain backup.  This little known coverage provides coverage if the sewage and or drain system backs up into your house.  Our agency has seen countless claims where a toilet has overflowed into the downstairs of a home.  One particularly nasty claim had a toilet overflow into a basement.  The basement was finished and had a family room with a ceiling fan on.  Yes, you got the saying right…it literally hit the fan. Yuck.  The HE7/21 covers up to $20,000 in damage automatically while the  HO3 has no coverage built into the policy so you have to pay an additional fee to have this coverage.
  7. Everyone knows you have homeowners insurance to cover your home but people often forget the homeowners policy covers you for liability too.  You can select the amount of personal liability coverage you purchase with limits beginning at $100,000.  On the HE7/21 personal liability will also cover something called personal injury.  Without getting too technical personal injury covers things like false arrest, detention and imprisonment and malicious prosecution. The HO3 has no coverage provided.  This is one of those coverages you won’t put any thought into at all unless you find yourself in a very unfortunate and completely unforeseen situation like this and then you would count your lucky stars you have coverage!

There you have a snapshot into insuranceez and why the HE7/21 policy has far better coverage (and is often less expensive believe it or not) than an HO3 home insurance policy.  If you have any specific coverage questions about your home insurance please reach out to us.  We would love to hear from you and help you make sense of the crazy world of insurance.

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