8 Types of Homeowners Insurance Policies

Homeowners insurance is one of the most critical investments you can make to safeguard your house — and, by implication, your family — from unanticipated costs that you would otherwise have to handle.

You definitely have a lot of questions about homeowners insurance if you're in the market for it. What level of protection do you require? What will the cost of coverage be? What factors have an impact on your deductible? Are there any home modifications, enhancements, or changes that could help you save money on your insurance?

All of these are excellent questions to ponder. Another crucial thing to consider is: What type of homeowner's insurance do I require?

We'll go over the many types of homeowners insurance coverage and explain the important distinctions between them in the sections below. We also provide some guidelines to assist you in determining the type of coverage you'll require.

Homeowners Insurance Types

As you browse for insurance, you may come across eight distinct types of "basic" homes insurance coverage. They're numbered 1 through 8, and each one provides different sorts and levels of security.

These are the following:

HO-1: Basic Form

HO-2: Broad Form

HO-3: Special Form

HO-4: Contents Broad Form

HO-5: Comprehensive Form

HO-6: Unit-owners Form

HO-7: Mobile Home Form

HO-8: Modified Coverage Form

Homeowners Insurance Glossary:

Damage or loss caused by an incident that is specifically listed in the policy is referred to as a named danger.

The expense of replacing something, such as your home or personal items, is referred to as the replacement cost.

Actual cash value: This is the value of anything after depreciation has been taken into account. It is usually less than the cost of replacement.

1.) HO-1: Basic Form

What it is: HO-1 insurance, often known as basic form homeowners insurance, is the most fundamental type of home insurance available. Your home will usually be covered at its real cash value if you have an HO-1 policy. HO-1 policies may cover personal belongings, although this is not always the case.

It includes the following topics: HO-1 insurance typically only cover damage or loss caused by a list of ten distinct perils:

• Lightning or fire
• Hailstorm or windstorm
• Explosion
• Civil unrest or riot
• Aircraft
• Vehicles
• Smoke
• Vandalism and sabotage
• Theft
• Eruptions of volcanoes

Damage or loss resulting from events not specifically specified are not covered.

Many insurance carriers no longer offer these plans since they provide such limited coverage and do not cover some very regular incidents (such as damage caused by falling objects or the weight of snow or ice on a roof). For the most part, HO-1 insurance is not recommended.

2) HO-2 Broad Form

What it is: HO-2 insurance is also known as broad form homeowners insurance since, in comparison to an HO-1 policy, it covers a wider range of dangers. In most cases, HO-2 policies will cover your home at its replacement cost. Personal belongings will be covered at their current market value.

What it covers: An HO-2 policy usually covers everything that an HO-1 policy does, plus additional coverage for dangers such as damage caused by:

• On a building, the weight of ice or snow
• A water or steam overflow or discharge that is unintentional.
• Freezing
• A sudden and unintentional incident causes cracking or bulging
• Accidental discharge caused by an electrical current created artificially (i.e., a power surge)
• Objects that fall

Depending on the provider, individual HO-2 policies may include coverage for additional named dangers.

HO-2 policies are more prevalent than HO-1 policies, but they are still less common than HO-3 and HO-5 policies. This is due to the fact that they only provide limited coverage.

3) HO-3: Special Form

What it is: The most prevalent sort of homeowners insurance is HO-3 coverage. Special form coverage is another name for it. Your home will usually be insured at its replacement cost under HO-3 insurance, while your personal property will be protected up to its real cash worth. For a small fee, an endorsement can be added to your policy to offer replacement coverage for your personal goods.

What it covers: HO-3 provides coverage against a significantly larger range of dangers than HO-1 and HO-2 insurance. This is because, although HO-1 and HO-2 plans only give coverage against particular stated hazards, an HO-3 insurance will cover your home against any peril save those specifically excluded in the policy.

The following dangers are frequently excluded from an HO-3 policy:

• Earthquake
• Flood
• Landslide/mudslide
• Nuclear Detonation
• Sinkhole
• Neglect
• Whether it's a war or a government action,
• Among other things

Personal property is usually exclusively covered by HO-3 insurance against the named hazards listed in the policy, which are normally the same as the named perils contained in an HO-2 policy.

Who it's for: Most homeowners will find this sort of insurance to be a good fit. It's no surprise that it's the most popular homeowner's insurance coverage.

4) HO-4: Contents Broad Form

What it is: Renter's insurance is also known as HO-4. As a result, HO-4 plans are tailored to those who rent or lease an apartment, home, or condominium.

What it covers: Renter's insurance protects a renter's personal belongings (at replacement cost) against the same stated risks as an HO-3 policy. If your leased house becomes unlivable due to damage caused by a listed peril — such as a fire — and you need to find a new place to stay, renter's insurance will normally cover your living expenses.

Liability coverage may or may not be included in an HO-4 policy.

Who it's for: This policy is for you if you're renting an apartment, condo, or house!

5.) HO-5: Comprehensive Form

What it entails: HO-5 insurance, often known as a comprehensive policy, is frequently thought to provide the most comprehensive coverage for single-family homes. It's comparable to an HO-3 policy in many ways, but with more protection and a few major changes.

What it covers: An HO-3 only insures your property for its replacement cost, while your personal possessions are only protected for their cash worth. An HO-5 policy covers the replacement cost of your home and personal goods (which is typically higher than cash value).

Furthermore, whereas an HO-3 limits personal items coverage to only specific dangers, an HO-5 covers your personal belongings for all of the same risks as your home. Finally, larger coverage limits for some items of personal property, such as art, jewelry, and technology, are usually included with an HO-5 insurance.

Who it's for: An HO-5 policy is a fantastic choice if you have a lot of high-value personal property in your house or if you just want the most coverage possible. HO-5 is the second most frequent form of homeowners insurance coverage, behind HO-3.

6.) HO-6: Unit Owners Form

What it entails: An HO-6 policy, commonly known as condo insurance or unit-owners insurance, is a unique type of policy for those who live in a co-op or condominium.

What it covers: In most circumstances, the condo association will have HOA insurance, which normally covers the condo structure and some common areas. While each HOA policy will differ in terms of how much (and what) it covers, you, as the unit owner, will be responsible for everything the HOA does not cover.

Typically, this will include coverage for:

• After you bought the unit, any renovations, upgrades, or improvements were made to it.
• The unit's walls, floor, and ceiling
• Personal belongings
• Loss of utility
• Personal responsibility
• as well as others

Because HOA plans vary so much, you must know exactly what's covered by the master insurance so that you can buy enough coverage for your individual unit.

Who it's for: If you live in a condo or co-op, you'll almost certainly require HO-6 insurance. Renters insurance is required if you rent one of these properties (HO-4).

7.) HO-7: Form for a Mobile Home

What it is: An HO-7 policy is meant to provide the same coverage as an HO-3 policy, but specifically for mobile homes. This is because an HO-3 policy, which is meant for a single-family house, does not cover mobile homes. Mobile home policies are another name for these insurance (MHP).

What it covers: HO-7 policies can cover a wide range of structures, including the following:

• Manufactured homes, both single and double-wide
• Single- and double-wide mobile homes are available.
• Trailers are a type of vehicle that is used (including travel trailers and fifth-wheel trailers)
• Houses that are divided into sections
• Houses that are built in modules
• Model homes for sale in the park

It's worth noting that most mobile home insurance policies only cover the home while it's parked. It usually does not cover any damages or losses that occur while the house is being transported.

It's intended for: This type of policy may be appropriate for you if your home fits into any of the structures indicated above. However, mobile home insurance may be obtained as an endorsement on a different policy type, such as an HO-3 or HO-5. An insurance agent can help you understand your options if you're not sure if your home qualifies for HO-7, HO-3, or HO-5 coverage.

8.) HO-8 Modified Coverage Form

What it is: HO-8 plans are designed to cover properties that would otherwise fail to fulfill the insurer's standards for other forms of coverage. In most circumstances, this indicates that the home is at significant risk of loss or damage or that the home's replacement cost is greater than its current cash value.

What it covers: HO-8 insurance usually covers the same identified dangers as an HO-1 policy. The policy's coverage will be determined by the home's real cash value rather than its replacement cost.

Who it's for: This sort of policy is frequently held by older homes with aluminum wiring (which is prone to fire), a broken roof, considerably outdated plumbing, or other problems that would require correction or replacement in order to qualify for other types of coverage. If you can't afford or don't want to make these repairs (as is the case for properties that are historical landmarks, for example), an HO-8 insurance allows you to get coverage for your property without having to make these costly upgrades.

Riders and other coverage should not be overlooked!

In addition to the insurance categories outlined above, you should familiarize yourself with the various riders available to you and evaluate whether or not you should acquire them. Riders are like add-ons to your standard homeowner's insurance policy, providing additional coverage for special occurrences. Many more riders, such as flood insurance, sewer backup/pipe coverage, other structures coverage, and earthquake coverage, may be available to you.