June 23, 2024
Types of homeowners insurance

 

An HO-1 is the most basic homeowners insurance policy. It only provides coverage for the structure of your home, attached structures like garages and appliances and home features like carpeting. It does not include coverage for personal property, liability or additional living expenses. Because of those limitations, it is not as popular as more robust policy options.

 

HO-1 insurance is a named perils policy, meaning it only covers your home in specific loss events, which typically include:

 

Damage from aircrafts or vehicles

Explosions

Fire and lightning

Hail and windstorms

Riots

Smoke

Theft

Vandalism

Volcanic eruption

With an HO-1 policy, your home, attached structures, appliances and home features will only be protected if they are damaged from one of the perils that is specifically listed in your policy. If they incur damage from anything else, you will be unable to file a claim with your home insurance company and would need to pay for the repairs out of pocket. It is worth noting that an HO-1 policy does not include liability, loss of use coverage or medical payments coverage, which are part of standard home policies. Because coverage is so limited, many insurers do not write this type of policy.

 

Learn more: HO-1 insurance

 

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HO–2

An HO-2 insurance policy is also known as a broad form and covers your home and your personal belongings. Most home insurance companies will cover your personal belongings up to a specified level if they are at home, in your car or somewhere else, such as an offsite storage facility. HO-2 policies may include liability coverage in some circumstances. To determine if your HO-2 policy includes liability coverage, contact your insurance carrier directly.

 

Like an HO-1 policy, HO-2 insurance is a named perils policy that covers your home and your personal items from the losses that are listed out in your policy. Typically, the losses found in an HO-2 policy are similar to the ones in an HO-1, but may include a few additional ones:

 

Accidental discharge or overflow of water or steam within the home

A falling object

Freezing of pipes and heating and air conditioning systems

Sudden and accidental damage from certain electrical currents

Tearing apart, burning, cracking from some household systems

Weight from ice, snow or sleet

Learn more: HO-2 insurance

 

HO-3

The most common type of homeowners insurance is the HO-3 policy, which covers your home, your personal property, liability, additional living expenses and medical payments. Unlike an HO-1 and HO-2 policy, your home and attached structures are protected on an open-peril basis; they are protected from all kinds of losses except the ones that are specifically excluded from your policy.

 

Personal finance and insurance expert Laura Adams says, “An HO-3 is considered the standard coverage. It gives you ‘open perils’ coverage for your home structure, which protects you from all disasters unless the policy lists exceptions. However, you receive ‘named perils’ coverage for personal possessions, which applies to disasters named in the policy.”

 

Your home and other structures typically have the following perils excluded:

 

Any animals owned by the insured

Birds, rodents, varmint

Defective construction or maintenance

Earth movement

Flood

Foundation issues

Government actions

Intentional loss

Mechanical breakdown

Mold, fungus, wet rot

Neglect

Nuclear hazard

Ordinance or law

Pet or animal damage

Pollution and corrosion

Power failure

Smog, rust, or corrosion

Theft, vandalism and frozen pipes in vacant houses

Wear and tear

War and surrection

Although floods and earthquakes are not covered by a standard HO-3 policy, you may be able to get an endorsement or separate flood insurance or earthquake policy to meet these coverage needs.

 

Damage from aircrafts or vehicles

Damage from the weight of snow or ice

Damages caused by an electrical current

Explosions

Falling objects

Fire and lightning

Hail and windstorms

Pipes freezing

Riots

Smoke

Theft

Vandalism

Volcanic eruptions

Water damage from plumbing or HVAC overflow

Water heater damage

Learn more: HO-3 insurance

 

HO–4

An HO-4 policy, also known as renters insurance, is intended for renters who want to insure their personal belongings and get additional coverage, like liability and additional living expenses. An HO-4 is not technically a “homeowners” policy, as renters don’t own the property where they are living, which is why this policy type excludes coverage for the building’s structure whether it is a single-family home or multi-family structure like an apartment building. Renters would need to purchase separate coverage for flood and earthquake damage.

 

Renters insurance policies are usually named perils policies that cover the following events:

 

Damage from aircrafts or vehicles

Damage from the weight of snow or ice

Damages caused by an electrical current

Explosions

Falling objects

Fire and lightning

Hail and windstorms

Pipes freezing

Riots

Smoke

Theft

Vandalism

Volcanic eruptions

Water damage from plumbing or HVAC overflow

Water heater damage

Learn more: HO-4 insurance

 

HO–5

An HO-5 policy is the most robust option available, covering your home, your personal belongings, liability, additional living expenses and medical payments for others. These policies may also have higher available limits for things like jewelry compared to the more common HO-3 policy. However, not all home insurers offer HO-5 policies and not all homeowners will be able to purchase an HO-5 policy due to the strict qualification guidelines.

 

Adams discusses how an HO-5 policy could be beneficial for individuals with high-value items. She says, “It typically costs more and may not be offered by every insurer but could be worth it if you have many valuable possessions.”

 

With an HO-5 policy, your home and your personal items are both covered on an open perils basis. Some common exclusions include:

 

Earth movement

Government actions or laws

Infestation of birds, rodents or insects

Intentional loss

Mechanical breakdown

Mold

Nuclear hazard

Pets

Vandalism if the property is vacant more than two months

War and surrection

Water damages from floods or sewer backup

Because an HO-5 policy is written on an open perils basis rather than on a named perils basis, it covers more circumstances and can make it easier to get coverage when you file a claim. Because of its high level of protection, an HO-5 policy is usually more expensive than a standard HO-3.

 

Learn more: HO-5 insurance

 

HO–6

HO-6 insurance is specifically for condo owners. It covers everything inside your unit, as well as personal liability and additional living expenses. Condo policies also typically include some dwelling coverage, as condo owners may be responsible for the interior walls of their units. It is important to have enough coverage in your condo policy to not only pay off your mortgage, but to purchase a similar unit if your building is damaged or destroyed and you need to move elsewhere. For flood and earthquake coverage, separate coverage would need to be purchased.

 

Because condo residents only own their unit, and not the whole building, the condo association typically has a master insurance policy that protects common areas, grounds and external parts of the building. Condo owners generally help pay for the association’s insurance in the form of condo or HOA fees.

 

HO-6 policies are named perils policies that generally cover:

 

Damage from aircrafts or vehicles

Damage from the weight of snow or ice

Damages caused by an electrical current

Explosions

Falling objects

Fire and lightning

Hail and windstorms

Pipes freezing

Riots

Smoke

Theft

Vandalism

Volcanic eruptions

Water damage from plumbing or HVAC overflow

Water heater damage

Learn more: HO-6 insurance

 

HO–7

An HO-7 insurance policy covers mobile or manufactured homes, including trailers, sectional homes, RVs and modular homes. This type of policy provides coverage for your home’s structure, your personal belongings, liability, additional living expenses and medical payments. Flood and earthquake coverage would need to be purchased separately.

 

The exterior of your home is covered under an open perils policy, which covers any situation that is not explicitly stated in your insurance policy.

 

However, HO-7 policies cover your personal belongings under a named perils policy. That means your personal items are only covered under a specific list of circumstances, including:

 

Damage from aircrafts or vehicles

Explosions

Fire and lightning

Hail and windstorms

Riots

Smoke

Theft

Vandalism

HO–8

The last type of homeowners insurance is the HO-8 policy, which is likely ideal for homeowners who have older homes or homes that would be more difficult to replace. This includes architecturally significant houses, historic landmark homes or homes built with materials and methods that are not common today. If it would cost more to repair your damaged home than its current value, an HO-8 policy may be a suitable option.

 

HO-8 policies include the standard coverage for dwelling, personal property, liability, additional living expenses and medical payments. Both your home’s structure and your personal property are covered under a named perils policy. This includes events such as:

 

Damage from aircraft or vehicles

Explosions

Fire and lightning

Hail and windstorms

Riots

Smoke

Theft

Vandalism

Volcanic eruption

Like a standard home policy, flood and earthquake coverage would need to be purchased separately.

 

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