Types of Homeowners Insurance

Fact-checked with HomeInsurance.com

5 min read
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Buying a house is a big investment. To protect your new home, it’s important to get homeowners insurance. Basic insurance policies cover your home and your belongings against damage and destruction from certain events, like fires or extreme weather. Without homeowners insurance, you would have to pay out-of-pocket to repair or rebuild your home.

However, not all homeowners insurance is created equal. There are many different types of homeowners insurance, so you need to understand your options before purchasing a policy. In this article, we’ll explain the various types of home insurance so you can decide which kind of coverage is best for you. Note that different insurance companies might have slightly different included or excluded perils in certain coverage types, so double-check your policy if you have any questions about what is and isn’t covered.

HO–1

An HO-1 policy is the most basic form of homeowners insurance. It only provides coverage for the structure of your home. It doesn’t include coverage for personal property, liability or additional living expenses. Because of those limitations, it’s not a popular choice for home insurance.

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

  • Damage from aircrafts or vehicles
  • Explosions
  • Fire and lightning
  • Hail and windstorms
  • Riots
  • Smoke
  • Theft
  • Vandalism
  • Volcanic eruption

HO–2

An HO-2 insurance policy covers your home and your personal belongings. Most insurance companies will cover your personal belongings no matter where they are whether they are at home, in your car or somewhere else. But because HO-2 policies don’t offer liability coverage, it’s not recommended for most homeowners.

Like an HO-1 policy, HO-2 insurance is a named perils policy that covers your home and your personal items from the same circumstances covered by an HO-1 policy.

HO-3

The most common type of homeowners insurance is an HO-3 policy, which covers your home, your personal property, liability, additional living expenses and medical payments. If you took out a home loan, most mortgage lenders will require you to have at least HO-3 level coverage.

Most HO-3 policies are an open perils policy, meaning all of your claims will be covered unless otherwise written in your policy. Perils that are usually excluded are:

  • Defective construction or maintenance
  • Foundation issues
  • Government actions
  • Pet or animal damage
  • Pollution and corrosion
  • Theft, vandalism and frozen pipes in vacant houses
  • Wear and tear

However, your personal property is covered under a named perils policy with HO-3 insurance, which means it only covers against specifically listed in your policy. You can expect your personal items to be covered under the following circumstances:

  • Damage from aircrafts or vehicles
  • Damage from snow or ice
  • Damages caused by an electrical current
  • Explosions
  • Falling objects
  • Fire and lightning
  • Hail and windstorms
  • Pipes freezing
  • Riots
  • Smoke
  • Theft
  • Vandalism
  • Water damage from plumbing or HVAC overflow
  • Water heater damage

HO–4

An HO-4 insurance policy is another name for standard renters insurance. Renters insurance protects your personal property and offers liability coverage. Some policies also include additional living expenses, which could help you pay for food and hotel bills if your home were damaged and you had to temporarily move out. Because renters don’t own their home, it doesn’t offer any coverage for the structure of the building itself.

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

  • Damage from aircrafts or vehicles
  • Damage from snow or ice
  • Damages caused by an electrical current
  • Explosions
  • Falling objects
  • Fire and lightning
  • Hail and windstorms
  • Pipes freezing
  • Riots
  • Smoke
  • Theft
  • Vandalism
  • Water damage from plumbing or HVAC overflow
  • Water heater damage

HO–5

If you’re looking for the gold standard of home insurance, an HO-5 policy is it. This type of home insurance is the most comprehensive option available, which covers your home, your personal belongings, liability, additional living expenses and medical payments for others. These policies also have higher available limits for things like jewelry.

With an HO-5 policy, your home and your personal items are both covered under an open perils policy, which means that it will protect you from anything not specifically excluded in your policy. 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
  • Water damages from floods or sewer backup

Because an HO-5 policy is open peril instead of named peril, it covers more things and can make it easier because you don’t have to prove that the damage was caused by a covered peril.

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

HO-6 policies are named perils policies which generally protect coverage for:

  • Fire and lightning
  • Smoke
  • Hail and windstorms
  • Explosions
  • Riots
  • Damage from aircrafts or vehicles
  • Vandalism
  • Theft
  • Explosions

HO–7

An HO-7 insurance policy covers mobile or manufactured homes, including trailers, RVs and modular homes. It provides coverage for the structure of your home, your personal belongings, liability, additional living expenses and medical payments.

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
  • 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 ideal for homeowners who have older homes or homes that would be difficult to replace. This includes architecturally significant houses, historic landmark homes or homes that were built with materials and methods that aren’t common today. If it would cost more to repair your damaged home than its current value, an HO-8 policy is your best 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
  • Explosions
  • Fire and lightning
  • Hail and windstorms
  • Riots
  • Smoke
  • Theft
  • Vandalism

Frequently asked questions

What is the cheapest home insurance?

The cheapest type of home insurance is technically renters insurance, which can cost less than $20 per month for some people. However, traditional homeowners insurance tends to be much more expensive. Even then, the amount you pay for home insurance varies. Where you live, how old you are, the value of your home and your credit score are all factors that can raise or lower your rate. Still, you can try to find the providers with the cheapest home insurance for your situation.

How much should I be paying for homeowners insurance?

Homeowners insurance costs vary significantly between people. However, the average cost of home insurance in the United States is $1,211. You should get an idea of how much homeowners insurance costs in your area by doing research and getting several quotes.