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Types of Homeowners Insurance
Navigating the home insurance industry can be tough, especially for new homeowners. Finding the right policy takes time—and we’re here to help.
There are 8 different types of homeowner insurance, but not all of them are suited for the owners of traditional houses. Each type is focused on specific coverages for a specific kind of home.
The 8 types of homeowners insurance policy types:
- HO-1 — basic form (for homeowners)
- HO-2 — broad form (for homeowners)
- HO-3 — special form (for homeowners)
- HO-4 — tenant’s form (for renters)
- HO-5 — comprehensive form (for homeowners)
- HO-6 — condo form (for condo or co-op owners)
- HO-7 — mobile home form (for mobile home owners)
- HO-8 — older home form (homeowners)
The most basic form of homeowners insurance is rarely offered nowadays. Because home insurance plans that offer more coverage are only slightly more expensive than this basic plan, many home insurers chose not to carry HO-1 insurance.
HO-1 is a named peril plan, so anything that happens outside of the perils specifically named in the policy is not covered.
The basic type of homeowners insurance only covers 10 perils: fire or smoke, explosions, lightning, hail and windstorms, theft, vandalism, damage from vehicles, damage from aircraft, riots and civil commotion, and volcanic eruption.
Fine print is where coverage gets tricky, as the cause of loss for certain weather events can be hard to distinguish. An example is a tornado, which may not fall under a provider’s definition of “wind damage.”
The Broad type of home insurance is more common than basic. But just like HO-1, this type of home insurance only covers perils named in the policy.
Aside from covering the home’s structure, HO-2 usually covers personal belongings, and some policies provide coverage for personal liability. The broad type of homeowners insurance covers all of the perils named in HO-1.
In addition, HO-2 also covers accidental discharge or overflow of water or steam, falling objects, freezing of household systems like AC or heating, sudden and accidental damage from an artificially generated electrical current, sudden and accidental tearing apart, cracking, burning, or bulging of pipes and other household systems, as well as weight of ice, snow, or sleet.
The Special type of home insurance differs from the first two types. Rather than a named-peril policy like the first two, HO-3 is an open-peril policy. That means unless the insurer excludes a peril from the policy, then the policy covers any kind of peril, named or not.
Insurers often exclude earthquakes and flooding from HO-3 plans and offer coverage for them separately from the main policy.
Usually, an HO-3 policy will cover the home’s structure, as well as any structures that are attached, like a carport or garage. The Special type of home insurance should also provide coverage for personal belongings and personal liability, if someone is injured on the insured property. HO-3 is commonly offered by today’s leading home insurers.
The Comprehensive type of home insurance is the gold standard in the industry. It is—as the name suggests—the most comprehensive kind of home insurance a homeowner can buy. Like HO-3, Comprehensive homeowners insurance is open-peril and will cover anything that’s not excluded from the policy.
Although HO-5 is similar to HO-3 in terms of coverage, there are a few important differences between the two kinds of home insurance.
While HO-3 only offers open-peril coverage on the home’s structure, HO-5 features open-peril coverage for personal belongings, as well as the structure of the home. After filing a claim, HO-5 pays out the replacement cost of the covered item, while HO-3 only replaces the item’s actual value. An HO-5 policy also has higher limits of coverage for valuables like jewelry.
Other differences between the two policies can differ by insurance company. But the Comprehensive type is usually more expensive than special, and fewer homes are eligible for a HO-5 policy.
HO-8 Older Home
HO-8 home insurance is typically used to cover homes that are 40-years or older. If homes built decades ago are damaged or destroyed, then the materials needed for replacement are often more expensive than the home’s value. So insurance companies use this type of home insurance to offer affordable coverage to people who own older homes.
Like HO-1 and HO-2, Older Home insurance uses named-peril policies. HO-8 policies usually cover dwelling, personal property, liability and loss of use from named perils.
The 10 named perils included in a HO-8 policy are the same perils named in an HO-1 policy. And rather than using the replacement cost included in HO-5, Older Home policies usually use common construction for paying out claims, which means that a rough equivalent of the destroyed material can be used for replacement.
Renters insurance policy types
The Tenant type of home insurance is commonly known as renters insurance and provides coverage for people who want insurance for their rented dwelling. The purpose of this kind of policy is to protect items within the dwelling, as well as any permanent fixtures like cabinets that were installed by the renter.
Most renters insurance are named-peril policies that cover the same perils listed in HO-2. Renters insurance usually provides coverage for personal property, liability, medical payments to others, and additional living expenses resulting from loss of use.
Aside from permanent fixtures inside the dwelling installed by the renter, HO-4 does not provide coverage for any structures. That’s because this type of home insurance is for renters who do not own the property where they live.
Co-op or condo insurance policy types
The Condo type of home insurance is often referred to as “walls-in” coverage, because it covers the interior of a structure, while the condo association’s master policy will cover the exterior structure and common areas.
Condo insurance usually uses a named-peril policy, but some insurance companies will allow the coverage to be extended to an open-peril policy, which will also mean paying a higher premium.
HO-6 home insurance will generally provide coverage for building property, personal property, personal liability and loss of use. Like other kinds of home insurance, HO-6 usually doesn’t cover flooding, and additional coverage will need to be purchased if flood insurance is desired.
Mobile home insurance policy types
HO-7 Mobile Home
HO-7 home insurance is specialized coverage for manufactured homes, which fall outside of the coverage areas for other types of home insurance. HO-7 will cover dwellings like RVs, trailers, sectional homes, as well as single-wide and double-wide mobile homes.
Mobile home insurance usually features open-peril policies very similar to HO-3.
Under an HO-7 policy, dwelling, detached structures, personal property and liability are generally covered. Like other kinds of home insurance, the age or size of the structure will probably affect the price of the premium with a HO-7 policy.