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Types of homeowners insurance

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Part of the home buying process is finding the best homeowners insurance for your new home. While the standard home is typically considered a single-family home, there are lots of other types of housing that you may need to insure.

As such, there are also a wide variety of homeowners insurance policies, each one geared toward a different type of home. Whether you live in a condo, co-op, mobile home or an older home, it’s possible to find the right homeowners insurance policy for your needs and situation. In general, the main types of homeowners insurance policies are:

HO–1

An HO-1 policy is the most basic of all the types of homeowners insurance policies. 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 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

Learn more: HO-1 Insurance

HO–2

An HO-2 insurance policy is also known as a broad form and covers your home and your personal belongings. Most insurance companies will cover your personal belongings no matter where they are at home, in your car or somewhere else. 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 same circumstances covered by an HO-1 policy. This policy type covers everything that the HO-1 covers, but also adds a few additional perils:

  • Accidental discharge or overflow of water or steam within the home
  • Tearing apart, burning, cracking from some household systems
  • Freezing of pipes and heating and air conditioning systems
  • Sudden and accidental damage from certain electrical currents
  • A falling object
  • Weight from ice, snow or sleet

Learn more: HO-2 Insurance

HO-3

The most common type of homeowners insurance is the HO-3 Special Form policy, which covers your home, your personal property, liability, additional living expenses and medical payments.

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:

  • 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
  • Flood
  • Earth movement
  • War
  • Nuclear hazard
  • Intentional loss
  • Neglect
  • Mold, fungus, wet rot
  • Power failure
  • Ordinance or law
  • Mechanical breakdown
  • Smog, rust, or corrosion
  • Birds, rodents, varmint
  • Any animals owned by the insured

Since your personal property is covered under named perils, your personal items are usually covered under the following circumstances:

  • 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
  • Falling objects
  • 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 their homes, which is why this policy type excludes coverage for the building’s structure.

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
  • Volcanic eruptions
  • 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

Learn more: HO-4 Insurance

HO–5

If you are 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, covering 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.

Of all the types of homeowners insurance policies, Adams recommends HO-5 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 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 written on an open perils basis rather than on a named perils basis, it covers more circumstances and can make it easier to file a claim because you do not have to prove that a covered peril caused the damage.

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. Because condo residents only own their unit, and not the whole building, the condo association typically has its own 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 which generally protect coverage for:

  • 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
  • Falling objects
  • 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.

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 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 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

Frequently asked questions

What is the cheapest home insurance?

Your cost for homeowners insurance may vary depending on where you live, how old you are, the value of your home and your credit score, if allowed as a rating factor in your state. 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 $1,312 per year for $250,000 in dwelling coverage. You should get an idea of how much homeowners insurance costs in your area by doing research and getting several quotes.

How many types of home insurance are there?

There are eight types of home insurance. They are classified as HO-1 through HO-8. Each category is designed for a different type of home with its own coverages.

Is everything covered by the different types of homeowners insurance policies?

Each type of homeowners insurance is geared towards a different homeowner, and each has limitations. According to Adams, “No matter which type of home insurance you have, the peril must be accidental and sudden. If you have damage caused by negligence on your part, it won’t be covered.” Additionally, some natural disasters, like flood and earthquakes, are excluded from homeowners policies and will require a separate earthquake or flood insurance policy for coverage.

Can I decide to make my homeowners insurance named peril or open peril?

Whether your homeowners insurance is named peril or open peril depends on the policy you are purchasing and whether your insurance company offers that type of coverage. As a policyholder, you are generally not able to amend the policy terms unless it is to turn down specific coverage options in writing. As such, it may be beneficial to speak with a knowledgeable licensed agent in your area.

Is homeowners insurance required?

If you are purchasing a home with a mortgage, your financial institution may require you to have an active homeowners insurance policy. But even if you have already paid off the loan — or purchased your home without one — having a homeowners insurance policy could help you to save compared to paying the full cost of repairs out-of-pocket in the event of a total or major covered loss.

Written by
Grace Kim
Insurance Contributor
Grace Kim has two years of experience in writing for finance and insurance domains such as The Cheapest Car Insurance Companies in New Jersey at Bankrate and Reviews.com. She has written about auto, homeowners, renters and life insurance. She has spent most of her professional experience writing about finance and tech topics.
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