• Homeowner's insurance regulations make understanding policy coverage easier.house image by Cora Reed from Fotolia.com
  
  Comparing insurance products can be confusing. However, the states regulate the contents of policies, which makes them easier to understand. Every type of policy has a form, and each form must contain certain specifics or it doesn't meet the state's laws. Luckily, all the states worked together on this regulation, so no matter where you live, if you have a plain-vanilla HO3 form with no extra riders, it's the same as another person's HO3 hundred of miles away, except for variants such as deductibles and limits of liability.
  
  

Name That Form

• Homeowner's insurance has form names and numbers used nationally. The Dwelling Fire Form gives you coverage only for the house but nothing on personal property or liability. The Basic Form, HO1, has a limited list of perils it covers. A Modified Coverage Form, HO8, covers those same perils but for actual cash value, not replacement cost. It's for older homes.
  
  The Broad Form, HO2, increases the number of perils, and the Special Form, HO3, covers all perils for dwelling coverage not excluded in the policy but with broad form coverage on contents. The new HO5 simply includes the contents for all perils. The final two forms are the Tenant Form, HO4, and the Condominium Form, HO6. The Tenant Form covers only contents, and the Condominium Form covers only the interior of the condominium and the contents.
  
  

Breakdown of Coverage

• The states regulate the amount of minimum coverage for basic policies by the percentage of the dwelling coverage, coverage A. Coverage B is for other structures such as garages and is equal to 10 percent of the coverage A amount. Coverage C is contents coverage amounting to 50 percent of coverage A, with 10 percent of that toward personal property losses away from your home. Coverage D is loss of use of the property and is equal to 20 percent of the amount of coverage A.
  
  

Liability

• The liability section on homeowner's policies is on every form, except the Dwelling Fire Form. Based on regulations, it contains two parts. The first is liability that covers you if someone receives injury on your property and sues. The second part covers medical payments, where the company pays for medical bills from injury without the need for a lawsuit.
  
  

Required Coverage

• Unlike auto insurance, there's no law that requires homeowner's insurance. However, if a lending institution holds a mortgage on your property, it can demand that you get a policy. If you don't have one, it can buy one for you and charge you for the cost. The lender often purchases these normally high-priced, dwelling-only coverage policies from its own insurance department.
  
  

80 Percent Rule

• Most homeowner's policies require you to insure 80 percent of replacement cost or value, depending on the form. If you don't and have partial damage to your home, you pay a co-insurance penalty. If your damage was $10,000 and you insured the house for 60 percent of the value, you'd pay 40 percent of the loss, or $4,000.
  
  

Replacement Cost

• Unless you specifically request replacement cost on contents coverage, you'll receive the depreciated value of the items if you have a loss. While a new refrigerator might cost you $400 to buy, the insurance company may give you only about $50 if the refrigerator is several years old and you don't have coverage.