Does Insurance Cover This?

Just like a typical attorney’s answer … “it depends”. There is never one type of policy and typically no policyholder can really claim to have “full coverage.” Generally, there are several types of policies that cover different types of properties, most popular are listed below:

HO3 (typical homeowners’ policy)

This is a typical policy held by a California homeowner for their primary residence or a non-rental vacation property. It will insure the home’s cost of repairs to the dwelling/structure, which is the cost to rebuild the home, for example due to a fire that burns down the home completely. This policy will also cover damage to homeowner’s personal belongings, but will usually exclude vehicles which must be insured under a separate policy. Also, the policy will cover an increase in additional living expenses while the home is partially or completely uninhabitable due to a covered insurance damage. These expenses may include temporary housing rental costs, additional food and utility costs, and any other increase in normal living expenses. 

Finally, this type of policy will usually have liability coverage for any potential negligence to third parties for damage to their person, personal property or real property. For example, a homeowner may cause a fire while barbecuing in the backyard and cause a fire to a neighbor’s home, which may result in damage to neighbor’s home (real property), neighbor’s belongings inside that home (personal property) and may even injure the neighbor (personal injury). 

DP3 (typical landlord policy)

This is an insurance policy that covers a residential building, usually rented to others. This policy will usually include coverage for repairs of the dwelling/structure, everything attached to the building – for example, it will cover replacement of damaged kitchen cabinets, flooring or paint, but will not cover damage to tenant’s personal belongings. This type of policy also usually includes coverage for loss of rent due to a covered property damage and provides liability coverage for policyholder’s negligent acts against third parties.  

HO6 (typical condominium policy)

Very similar to coverage included in HO3 homeowners’ policy, but this policy is not typically based on a square footage of the home. Therefore, condominium/townhouse owners must choose their coverages wisely, with the help of an attorney or an experienced insurance agent/broker, to ensure that they have sufficient coverage/limits for the repairs of the interior of the unit, personal property and any additional living expenses. The homeowner association (“HOA”) master policy will typically cover repairs only to the exterior and structure (framing-insulation-exterior walls drywall) of the HOA complex. However, that policy may not cover damage to the interior of the condo owner’s unit and will never cover damage to personal property or provide living expense coverage. Sometimes, an HOA master policy even covers the repairs of the interior structure/dwelling of the condominium unit. However, in that instance, an HOA board or designated manager will have to agree to file a master policy insurance claim, which may affect coverage for unit owner’s damages. The HOA master policy along with HOA covenants, conditions and restrictions (CC&Rs) will usually dictate whether HOA master policy or policyholder’s condo policy will cover the damages. 

Commercial Policy 

A policy that usually covers many types of commercial buildings such as retail, industrial building, or a multi-unit residential building. This policy typically covers damages for repairs of the dwelling/structure of the building, loss of rent due to a covered property damage, and liability coverage (if property owner is negligent for damage to third party’s personal property, real property or bodily injury). 

Property owners may also consider purchasing an excess liability policy (a personal or a commercial “umbrella” policy) that may provide additional liability coverage of $1 million, $2M, or more in case property owner’s negligence exceeds liability coverage of a homeowners, auto or rental property policy. 

Most importantly, each property owner must make sure that they purchase correct policies with sufficient coverages, so that they have the necessary coverage for their damage when a claim does occur. 

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