Home Insurance Replacement Cost Policies – Coverage Differences
Today I would like to talk about the coverage difference between the HO-3 vs. HO-B replacement cost policies. Both have replacement cost for the dwelling and an endorsement can be added to cover the contents with replacement cost. But, what are the real differences between these plans when taking a closer look at at the coverage’s. To make my comparison I have used the website www.opic.state.tx.us and have selected Travelers HO-3 policy vs. American Risk Insurance HO-B policy provisions.
The first difference that I would like to discuss is water damage. Both cover sudden and accidental discharge or overflow of water or steam from plumbing, heating, or air conditioning systems. But, neither cover continuous or repeated leakage from plumbing, heating, or air conditioning systems. So what this really means is a claim would typically coverage the immediate damage cause by the leak but not the long term damage of the slow leakage. For instance, the base board and floor that would be rotted or damage due to the longevity of the leakage would not be covered.
The second difference would be the backup of sewers and drains. The typical HO-3 policy would have to be endorsed to have this coverage added whereas the HO-B policy would have the coverage included but with a sub-limit. This sub-limit is usually at $5,000 but depending on the carrier could be smaller or larger. Please check your endorsements to see what you have included in your policy, if anything.
The third difference might be the cost of testing, remediation and additional living expenses due to mold, Fungi or Other Microbes. Granted this coverage would have to be from a covered peril under the HO-3 policy, such as a water claim that caused some mold to grow. But, the HO-B policy would not cover the testing of such at all.
The final difference that I would like to discuss is damage to the foundation or slab. Typically, the HO-3 policy would not cover damage to the foundation or slab unless the policy is endorsed to have that added. But the HO-B policy would cover a peril like this for up to 15% of the dwelling amount as listed on the declaration page as item A. Even if the HO-3 policy endorsement is added then the 15% coverage would be present but would have a sub-limit up to $25,000.
These are the basic difference that I was able to draw from the website www.opic.state.tx.us which is the Texas Department of Insurance comparison tool. It lists all the standard line companies that Texas has registered and eligible to write products throughout the state. I have found that it’s a good tool to list out the differences when cases arise that customers, friends or employees want to know how two different companies or policies differ on paper.
Please take a look for yourself and see if you find the tool helpful in your search for answers on insurance.