Types of Homeowners Insurance Policies to Know

Types of Homeowners Insurance Policies to Know

Finding the best homeowners insurance starts with the type of home you live in. Standard homeowners insurance is usually designed for single-family homes, but there are other types of home insurance, each tailored to a specific type of home.

Homeowner’s insurance protects your home in its entirety. If a fire destroys your home, your insurance will help you rebuild it. If a thief breaks in and steals an electronic device, the policy helps replace the stolen item.

However, standard homeowners insurance does not guarantee everything that can cause problems in your home. That’s why you need to consider supplemental insurance that covers everything from earthquake damage, flooding and plumbing failures.

The terms and conditions of homeowner’s insurance are as follows:

HO-1: Basic Form.

In other words, HO-1 insurance, also known as homeowners insurance, is the most basic form of homeowners insurance. If you have an HO-1 policy, your home is usually compensated for its actual cash value. Personal belongings may be compensated with an HO-1 policy, but they may not always be.

For: HO-1 policies usually only cover damage or loss caused by 10 specifically named risks.

  • Fire or lightning.
  • Storm or hail.
  • An explosion.
  • A riot or civil commotion.
  • It’s an airplane.
  • A vehicle.
  • Smoke.
  • It is vandalism and mischief.
  • It is theft.
  • A volcanic eruption.

Damage or loss caused by events not specifically listed will not be compensated.

HO-2: Broad Form.

Broader HO-2 policies are more common than HO-1 and are reliably updated compared to the default form policy. HO-2 compensates the home (i.e., home structure) for replacement value and personal property for actual cash value. HO-2 also protects your home and personal belongings from six additional named hazards:

Masses of ice, snow or wet snow.

Accidental discharge or overflow of water or rivers.

Fixtures such as water heaters, central air conditioners or heating systems suddenly and accidentally tear, crack, burn or swell.


Artificially generated currents, such as power surges, cause sudden and accidental damage.

It’s a volcanic eruption.


The most common type of homeowners insurance is a special form HO-3 policy, which guarantees housing, personal property, liability, extra living expenses and medical expenses.

“HO-3 is considered standard insurance,” says Laura Adams, a personal finance and insurance expert. The service provides an “open risk” guarantee for home structures, protecting you against all natural disasters unless exclusions are specified in the policy. However, you will get a ‘named risk’ guarantee for your personal property that covers natural disasters as specified in the policy.”

Generally, the following risks are excluded for homes and other structures:

  • There are defects in construction or maintenance.
  • This is a major problem.
  • Government action.
  • Damage to pets.
  • Contamination and corrosion.
  • Theft, vandalism, and frozen pipes have occurred in empty houses.
  • Wear and tear.
  • Flooding.
  • The movement of the earth.
  • It’s war.
  • It’s nuclear risk.
  • It’s willful loss.
  • Leave it alone.
  • It’s mold, mildew, wet rot.
  • It’s a blackout.
  • Statute or law.
  • Mechanical failure.
  • Smog, rust or corrosion.
  • Birds, rodents, barmint.
  • All animals belong to the insured.

What is HO-4 Rental Insurance?

HO-4 policies, also known as renters insurance, are for people who rent homes and apartments. Things fall under the same 16 risks listed in the HO-3 policy. Additional living expenses and liability guarantees are also included.

The HO-4 policy does not cover damage to the rental unit itself. Landlords will need their own landlord’s insurance to cover the unit.

HO-5: Comprehensive Form.

Its contents: HO-5 insurance, that is, comprehensive insurance, is often considered to provide the highest level of coverage for single-family homes. It is much like an HO-3 policy, but with additional protection and some key differences.

The contents are as follows: under HO-3, only your home is insured at replacement cost, and your personal belongings are insured at the actual cash value. HO-5 reimburses both your home and your personal effects for replacement cost (usually above cash value).

Also, HO-3 limits coverage for personal effects to only certain risks, while HO-5 limits coverage for personal effects to the same risks as the home. Finally, HO-5 policies are generally subject to higher limits on coverage for certain types of personal property, such as artwork, jewelry and electronics.

Theme: Because of the higher coverage limitations of an HO-5 policy, it’s a good choice if you have more expensive personal property in your home or just want to get as much coverage as possible. After HO-3, HO-5 is the second most common type of homeowners insurance.

HO-6: Homeowner’s Form.

The HO-6 policy, also known as condominium insurance, is for people who live in condominiums or co-ops. The amount of coverage required for condominium insurance may vary depending on what is covered by the HOA Condominium Association insurance.

Your condominium policy will require sufficient residential coverage to cover the cost of upgrades to your condominium, such as if you installed special fixtures. Your condo policy also includes personal property, loss of use, personal liability, medical expenses, and damage assessment coverage.


HO-7 insurance covers mobile homes or manufactured homes, including trailers, partial homes, SUVs and modular homes. This type of insurance provides coverage for the structure of the home, personal effects, liability, additional living and medical expenses.

The exterior of the home is insured against open risk, covering all situations not explicitly stated in the policy.

However, the HO-7 policy includes personal belongings under the specified risk policy. This means that your personal effects will only be handled under a certain list of circumstances, including:

  • Damage to the aircraft or vehicles.
  • It is an explosion.
  • Fire and lightning.
  • Hail and storm.
  • It’s a riot.
  • Smoke.
  • It’s theft.
  • It’s vandalism.

What is HO-8 Home Insurance?

HO-8 home insurance usually covers older homes built more than 40 years ago. For these homes, the cost of reconstruction exceeds the market value of the home. Historic homes and registered landmarks usually have an HO-8 policy. If you use an HO-8 policy, your home and property are only covered under the 10 specific risks listed in the policy.

  • Fire or lightning.
  • Storm or hail.
  • An explosion.
  • A riot or civil commotion.
  • It’s an airplane.
  • A vehicle.
  • Smoke.
  • It is vandalism or malicious hooliganism.
  • It is theft.
  • It is a volcanic eruption.

Duties, medical expenses for others, and additional living expenses are also included in HO-8.

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