Homeowner’s policies come in three flavors: HO1, HO2 and HO3. (Additionally there is an HO4 form for renters and an HO6 form for condo owners.) The HO1 form is very basic coverage, and the HO2 is only somewhat broader–meaning it covers a few more perils than an HO1. The HO3 is the broadest of all. It’s called an “all-risk” form. The first two forms only cover “named perils,” while the HO3 covers all risks not specifically excluded.
The higher the form number, the higher the premium cost, of course, but I feel that HO3 coverage is the minimum anyone needs regardless of how much more you must pay for it, even if you don’t have a home-based business. All-risk coverage is well worth the price!
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