The HO-3
The HO-3 policy is made primarily for single family homes. The coverage option for the HO-3 is as follows:
Coverge A - Dwelling: Covers the structure of the home (roof, outside walls, and anything attached to the home. Includes attached garage, inground swimming pool if extends from back of the house, pool cage, lanai. Anything that is attached to the house. Basically if you dont see land or greenery between the house and the structure, it is most likely covered here).
Things to know about coverage A: Coverage A only insures you for the cost to rebuild your home. You may live on the intercoastal and be able to sell your home for $4 million, but if it only costs $2 million to rebuild that is what the insurance company is going to give you except in the rarest exceptions. (Incidentally if a mortgagee tries to make you "over insure" your home to match the amount of your mortgage, they cannot do that. It is against the law in Florida. I have the statute if you need that reference).
The amount of your Coverage A can be determined one of two ways. A qualified appraisal can be done and submitted to the insurance company requesting a specific amount of coverage (though some insurance companies don't except appraisals) or by your insurance companies own "cost estimator." Information about your home is entered into the cost estimator (such as square footage of your home, type roof, size of garage, etc.) and the cost estimator comes up the amount of insurance required for coverage A. One of these two ways is what determines the amount of Coverage A on your policy. Depending on the company you can usually insure for an amount anywhere between 90-125% of the cost estimator or appraisal. You should never go below 80% of these results, because then your home will be insured at depreciated value.
Coverage B - Other Structures: Covers any structures that are "detached" from the dwelling (shed, detached garage, detached pool, backyard fence- even though may be touching up against the dwelling, b-bq grill, etc.)
Things to know about Coverage B: The amount of coverage you have for B is a percentage of Coverage A. The default for coverage B may be anywhere from 2%-20% of Coverage A depending on the insurance company. If you get a quote & want more or less coverage you can always request to add or take away coverage, but a certain amount almost always comes with the policy even if you don't have any detached structures.
Coverage C - Personal Property: Easiest to remember as your contents or personal belongings (living room set, bedroom set, refridgerator, t.v., clothing, limited coverage on jewelry, money, etc.)
Things to know about Coverage C: May be insured as "Replacement Cost" (replaces contents brand new) or "Actual Cash Value/ACV" (replaces contents at depreciated value, but saves a considerable amount of your policy).
Coverage C is almost always defaulted to 50% of Coverage A (which is often a rediculous amount of coverage for one's needs). Can be lowered to 25-30% of Coverage A if insured at ACV, though a small amount of companies will allow you to insure as low as 25% of A and still keep the option to insure at replacement cost.
It is a good idea to save receipts, take pictures or video, and document your personal property so you are not at the mercy of the adjuster who comes to your home should you have to file a claim.
Coverage D - Loss of Use: Coverage for the loss of use of your home (hurricane makes your home unliveable, this coverage is gives you reasonable support until you are able to move back in).
Coverge D is a percentage of Coverage A and most times is a set percentage depending on what the individual insurance company offers.
Coverage E - Personal Liability: This may be protection against a lawsuit from someone who wants to "go after your home." Coverage is worldwide, not restricted to your home. This coverage can be very valuable but only can be used if you are determined "legally liable" and usually comes in options of 100,000-300,000 though many companies are now offering up to 500,000 or more in certain circumstances.
Things to know about Coverage E: It is very affordable. To increase from 100,000 to 300,000 in coverage often costs between $25-$75 for the entire duration of the policy.
Coverage F - Medical Payments: Liability coverage for the premisis of your home. Can be used even if not "legally liable" (friend slips in your home and doesn't want to sue you, but you want to pay for his/her ambulance trip to the hospital, etc.) Usually comes in options of $1,000 - $3,000 in coverage. To increase to $3,0000 can cost $10 or less.
The HO-3 is a good policy for homeowners in that it has a broad range of perils it insures against (such as fire, water damage, pipe bursts, and unless excluded wind/hail/hurricane, theft, and many other perils).
Some perhaps helpful advice when buying an HO-3 policy.....
Please realize this is just my advice. Usually when folks are looking to get any type of insurance they are either looking for the best coverage or looking for ways to save money without sacrificing much quality in their insurance. We'll start with the later.
Saving Money on Your HO-3
This is the order I would follow when examining my own HO-3 policy.
1) Check the amount of your amount of Coverage A. Usually this is accurate, but I have seen people overinsured by $75,000 or more at times.
2) Ask for a quote with "Wind Mitigation form" discounts. Homeowners are overpaying an average of 22% on their homes in the State of Florida in the results of some surveys because they are eligible for discounts they do not know about from this form. Typical savings if your roof has been redone since 2002 (when the latest hurricane code came out) are 25-45% and often higher. If your home is "concrete block" and built in the 70's or later, typical savings is 15-25% even if the roof hasn't been redone since 2002. 10-25% if woodframe.
3) If you're still looking to save more, you may want to consider replacing contents at ACV (depreciated value). This can save an additional 10-25% off the price of the policy.
4) Next on the list would be raising your "all other perils"/AOP deductible (other than hurricane) to $2,500 rather than the standard $1,000. Savings varies depending on the company, but is usually between 5-10%. Personally, I don't think the savings justifies the higher deductible in most cases.
5) Now we're down to my "not worth mentioning" options mostly because the savings is very minimal compared to the value of the coverage, but for the sake of knowing your options, here they are.... Taking $0 coverage for contents (would be a nice option except the savings is often very minimal), 5% or 10% hurricane deductibles, excluding sinkhole coverage.
Increasing or Getting Better Coverage on Your HO-3
Of course, it will cost you, but in some cases not as much as you might think. Where I would start:
1) Lower Deductibles: The "standard" deductibles for homeowners insurance is 2% hurricane/$1,000 AOP ("all other perils").
2% hurricane is 2% of your Coverage A - Dwelling. (ie: Your Coverage A is $200,000, then your hurricane deductible is $4,000). Most companies lowest deductible is 2%, but there are companies that offer a $500 deductible on hurricane/wind.
$1,000 AOP can be lowered to $500 as well with a number of companies. It should be noted that AOP is a misnomer. It should really be called All Other Covered Perils, as not every incident is covered under a homeowners policy in Florida. (ie: water damage from flood, backing up of sewers or drains, power failure that occurs away from premesis, war, and others).
2) Higher coverage B: Depending on the insurance company, Coverage B (see above) is usually between 2-10% of coverage A by default. Many don't need this coverage at all, or little of it, but if you have a detached garage, pool, expensive fence around the yard, or other detached structure, you may want to increase the amount of coverage you have here.
3) Higher Coverage C: Coverage C defaults to 50% of Coverage A which in most cases is plenty if not excessive, yet you may be one who needs more than 50% of A. Some companies allow you to go up to 75% of your Coverage A.
Important to note: If you need more Coverage C because you have expensive jewelry, musical equipment, fine arts, collectibles, etc., you will need to "schedule" those items seperately (see below). Increasing your coverage C will not cover some expensive belongings. Homeowner policies put a limit on the amount they will pay for certain type items.
4) Scheduled Personal Property: There are limits on homeowners policies on many items such as jewelry, furs, watches, fine arts, silverware, firearms, money, and the list goes on. The limits depend on the item and can range between a few hundred dollars to $2,500 or so.
If you have valuable personal property/contents or a valuable collection you may need to "schedule" (or itemize) these items seperately on your policy. Depending on the value you may need to insure it on a seperate policy altogether as the homeowners policy may be limited in that coverage.
5) Higher coverage E & F: Coverage E defaults to $100,000 with most companies, yet to insure at $300,000 usually only costs about $30 more, even moreso for coverage F which defaults to $1,000 but can be increased to $3,000 for about $9 in most cases.
6) Identity Theft: Many insurance companies offer identity theft coverage, though what it actually covers can be very vague. None the less many companies add the coverage for about $25.
7) Ordinance & Law: What is it first of all? Ordinance & Law coverage is added to your coverage A in the event an ordinance or law is passed that requires you to make an upgrade to your home. (ie: Your home was built in 1980. If a hurricane comes and blows out your windows, the insurance company is going to pay you enough money to give you the same kind of windows you had. Fair enough. But lets say, the State of Florida decides that those type windows aren't strong enough and can no longer be used. A higher quality, more expensive window must be used. That is where law & ordinance coverage comes in to give you extra coverage.
Most companies default at 10% of Coverage A, though some default at 25% of A. Typical options allow you to increase to 25% or 50% of your Coverage A amount.