What Are the Different Types of Homeowners Insurance Available Today?

Hello World!  Welcome Friends!  If you own or rent a home, condo or apartment, you need homeowners insurance. 

Not only will homeowners insurance protect you from personal liability and loss, but it also may be required when you are purchasing a home. 

There are many types of homeowners insurance policies to choose from, depending on several factors. Here are the different types of insurance and an overview of what they cover so you can make an informed decision when purchasing homeowners insurance.

HO-1: Basic Form

The HO-1 insurance policy is the most basic form of insurance you can purchase for your home. 

This type of policy is for “named perils” only, which means the insurance only covers the following 10 perils:

• Damage from aircrafts
• Damage from vehicles
• Explosions
• Fire and smoke
• Hail and windstorms
• Lightening
• Riots and civil commotion
• Theft
• Vandalism
• Volcanic eruption

With this policy, you are not covered for your personal property unless you have purchased additional coverage for the belongings in your home. You’re also not covered for any personal liability claims in case someone is injured on your property. 

In most cases, it’s not recommended to purchase the HO-1 policy because there are better options with more coverage for a similar price. Most mortgage companies consider HO-1 too limited for a home.

HO-2: Broad Form

The HO-2 policy is an expanded version of the HO-1 basic form. 

It is also a “named perils” policy that covers a total of 16 perils, the 10 basic perils plus the following:

• Accidental discharge or overflow of water or steam
• Falling objects
• Freezing of household systems, such as the heater or the air conditioner
• Sudden and accidental damage from artificially generated electrical current
• Sudden and accidental tearing apart, cracking, burning or bulging of pipes and other household systems

The HO-2 policy can cover personal belongings inside your home and personal liability as long as the damage was done by one of the named perils. 

HO-3: Special Form

The HO-3 insurance policy is one of the most popular homeowner’s insurance policies you can purchase. The policy offers comprehensive coverage at an affordable rate. 

This type of policy is an “open perils” policy, which means the insurance will cover anything that is not on the list of excluded perils. The list includes:

• Birds, vermin, rodents, and insects
• Collapse
• Discharge, dispersal or seepage of pollutions
• Earth movements, such as mudslides, earthquakes or landslides
• Government action
• Intentional loss
• Mechanical breakdown
• Mold, fungus or wet rot
• Neglect
• Nuclear hazard
• Ordinance of law
• Power failure
• Settling, shrinking, bulging or expanding
• Smog, rust, and corrosion
• Smoke from agricultural smudging
• Theft to a dwelling under construction
• Vandalism or malicious mischief
• Water damage
• War
• Wear and tear or deterioration

The HO-3 will generally cover your home, attached structures, personal belonging inside the home and personal liability. 

This policy does not cover earthquakes or floods. For that, you would need to research your insurance options to make sure you are fully covered.

HOB

The HOB policy is an adaptation of the HO-3 policy. The coverage is slightly expanded to include personal belongings, such as:

• Household accessories, including lawnmowers, boats, trailers, etc.
• Credit cards
• Jewelry
• Precious metals
• Securities

While items like these are covered under the HOB policy, there is a limitation to the amount of coverage offered. 

HO-4: Tenants Form

The HO-4 insurance policy, also known as apartment insurance or renter’s insurance, was created to cover damages for people who rent a home, apartment or condo. 

Generally, an HO-4 policy will cover:

• Personal property both inside and outside of your rental home, apartment or condo
• Personal liability for bodily injury or property damage
• Loss of use due to covered damage

This type of insurance doesn’t cover the structure of a building because the structure should be covered by the landlord’s insurance. 

HO-5: Comprehensive Form

The HO-5 insurance policy is the most expensive type of homeowner’s insurance because it offers the most coverage. This type of policy is also an “open perils” policy that covers everything that is not on the exclusion list of the HO-3 policy.

Unlike other policies, the “open perils” covers damage done to your personal property as well as your home. 

For example, if someone drives their car through the front of your home, the HO-5 policy will cover both the damage to your home and the damage done to your personal belongings inside of the home.

For damage to your personal property, you will receive a payment based on the replacement cost value instead of the current value of the item and the policy offers expanded limits for losses and damages. 

HO-6: Condo Form

The HO-6 insurance policy, also known as condo insurance, was created to cover damages specifically for people who own a condo.

This type of policy was created because condo owners typically do not own the building or the land it sits on, so the insurance they purchase needs to cover personal belongings, personal liability, and loss of use. 

Typically, the Homeowners Association (HOA) will cover damages to the structure of the unit and the outside areas. 

HO-7: Mobile Home Form

The HO-7 insurance policy is the HO-3 policy that has been adapted for manufactured homes. It is essentially the same policy but can only be used for owners of manufactured homes. 

HO-8: Older Home Form

The HO-8 insurance policy is similar to the HO-3 policy but it is created specifically for older homes.

The policy provides coverage for the 10, basic perils but also provides coverage for personal belongings, personal liability, and loss of use.

Typically, if a home is over 40 years old and has not been structurally and cosmetically updated, such as a registered landmark or historic home, this is the insurance to purchase. 

Types Of Homeowners Insurance: The Bottom Line

There are many types of homeowners insurance policies that you can purchase, depending on your needs. The best way to decide what policy is right for you is to do your research and compare policies so you can ensure your home is fully covered.

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