Your Guide to the Types of Home Insurance Policies

There are several basic types of home insurance that offer different levels of coverage. Each type of home insurance policy provides coverage for certain perils. A peril is the particular event that causes the damage or destruction of the home. Some types of home insurance policies will name the perils specifically, and others will exclude them. What you need out of home insurance depends on your home and what you want to cover. Read below to understand what is included across different types of home insurance coverage.

TIP: If you have any questions on a specific peril, or type of homeowners insurance coverage, then click here to consult an experienced professional.

Basic Types of Homeowners Insurance Coverage

HO-1 is very basic coverage. It only covers damage to the dwelling as a result of 10 listed perils, and does not include homeowners personal liability insurance. Therefore, if you’re sued by someone who slips on your property, your insurance company won’t defend you in court or pay the plaintiff if you are found to be at fault. If you have a mortgage, you would not buy this type of insurance as it would not provide you adequate protection to insure your home. The ten perils the HO-1 Home Insurance Policy will protect your home and belongings from are:

1. Fire or Lightning
2. Wind storm or Hail
3. Explosion
4. Riot or Civil Commotion
5. Aircraft
6. Vehicles (unless caused by the insured)
7. Smoke
8. Vandalism or Malicious Mischief
9. Theft (limit of liability on HO-1 is usually $1,000)
10. Volcanic Eruption

HO-2 is sometimes called the broad coverage policy. The HO-2 is similar to the HO-3 because it covers the dwelling (house) and other structures (detached garage, fence), but it insures against only specifically named perils. The policy includes more perils than HO-1 and offers homeowners personal liability coverage. The sixteen perils that your home and belongings are protected from with the HO-2 Home Insurance Policy are:

1. Fire or Lightning
2. Wind storm or Hail
3. Explosion
4. Riot or Civil Commotion
5. Aircraft
6. Vehicles
7. Smoke
8. Vandalism or Malicious Mischief
9. Theft
10. Volcanic Eruption
11. Falling Objects
12. Weight of Ice, Snow, or Sleet
13. Accidental Discharge or Overflow of Water or Stream
14. Sudden & Accidental Tearing Apart, Cracking, Burning, or Bulging
15. Freezing
16. Sudden & Accidental Damage from Artificially Generated Electrical Current

HO-3 policy is called the special form policy. It insures your home and detached structures against loss or damage from any peril except for those specifically excluded in the policy. This is the policy most homeowners purchase. It is important for you to read your policy carefully to see what is excluded””you may want to cover exclusions with special home insurance riders. The contents of your home are only covered against listed perils, so be sure to read that list in your policy. This policy also includes liability coverage. If the damage to your home is not caused by something on the exclusion list, then you have coverage. Exclusion List for Your HO-3 policy:

1. Earth Movement (earthquake coverage can be added by endorsement)
2. Ordinance or Law (some coverage may be provided in your policy)
3. Water Damage (Sudden & Accidental Water Damage is automatically included; others can be endorsed onto the policy)
4. Power Failure
5. Neglect
6. War
7. Nuclear Hazard
8. Intentional Loss
9. Government Action
10. Collapse (some coverage may be provided in your policy)
11. Theft to a Dwelling Under Construction
12. Vandalism or Malicious Mischief (only if vacant more than sixty days)
13. Mold, Fungus, or Wet Rot (some coverage may be provided in your policy)
14. Wear & Tear, Deterioration
15. Mechanical Breakdown
16. Smog, Rust & Corrosion
17. Smoke from Agricultural Smudging & Industrial Operations
18. Discharge, Dispersal, Seepage of Pollutants
19. Settling, Shrinking, Bulging, or Expanding
20. Birds, Vermin, Rodents, Insects
21. Animals Owned by Insured

HO-4 This is the only insurance policy designed for renters. It is however, part of the homeowner’s policy group. It is known as the tenant homeowner’s policy as well as the Contents Broad Form policy, and it covers only the contents of the home and personal liability for the insured tenant. The policy also covers additional living expenses if a renter is displaced due to a covered loss, medical payments to others, as well as the liability protection.

HO-5 is one of the best home insurance policies available in the United States. It provides excellent coverage for the dwelling itself and for the contents of your home. The HO-5 insurance policy is an open perils policy, which means it only lists the perils the policy does not cover. If your home and/or personal property are damaged by something that is not on the exclusion list, then you have insurance coverage. This policy provides the most extensive coverage that is offered. It is one of the most elite home insurance policies available to homeowners. Exclusion List for Your Home & Contents:

1. Earth Movement (earthquake coverage can be added by endorsement)
2. Ordinance or Law (some coverage may be provided in your policy)
3. Water Damage (Sudden & Accidental Water Damage is automatically included; others can be endorsed onto the policy)
4. Power Failure
5. Neglect
6. War
7. Nuclear Hazard
8. Intentional Loss
9. Government Action
10. Collapse (some coverage may be provided in your policy)
11. Theft to a Dwelling Under Construction
12. Vandalism or Malicious Mischief (only if vacant more than sixty days)
13. Mold, Fungus, or Wet Rot (some coverage may be provided in your policy)
14. Wear & Tear, Deterioration
15. Mechanical Breakdown
16. Smog, Rust & Corrosion
17. Smoke from Agricultural Smudging & Industrial Operations
18. Discharge, Dispersal, Seepage of Pollutants
19. Settling, Shrinking, Bulging, or Expanding
20. Birds, Vermin, Rodents, Insects
21. Animals Owned by Insured

HO-6 covers a condominium owner who wishes to insure items not insured by the association policy, as well as the personal property inside the unit. This condo insurance focuses on contents and is similar to the HO-4 because the policy holder does not own the structure the unit is in. This policy includes liability insurance as well, which means you’ll be covered if someone is injured in your unit and wants to sue. It also is a name peril policy and it covers against sixteen named perils. This protection covers both your dwelling and your personal property. The sixteen perils are:

1. Fire or Lightning
2. Wind storm or Hail
3. Explosion
4. Riot or Civil Commotion
5. Aircraft
6. Vehicles
7. Smoke
8. Vandalism or Malicious Mischief
9. Theft
10. Volcanic Eruption
11. Falling Objects
12. Weight of Ice, Snow, or Sleet
13. Accidental Discharge or Overflow of Water or Stream
14. Sudden & Accidental Tearing Apart, Cracking, Burning, or Bulging
15. Freezing
16. Sudden & Accidental Damage from Artificially Generated Electric Current

HO-8 is the older home policy. Having an older home may preclude you from being able to buy a replacement policy; you may have to buy a modified replacement policy instead. Put simply, you need this insurance if the cost to rebuild your home far exceeds its current market value. Your home may currently be valued at $400,000, but costs $500,000 to rebuild if completely destroyed by fire. For example, if you live in a very old home built using methods unique to the period it was built, this policy would be your best option. Make sure you determine whether the policy is covering you at actual cash value or replacement cost. This is important! You can always endorse the policy to get replacement cost coverage. The HO-8 insurance policy is a named perils home insurance policy. The ten perils the HO-8 Home Insurance Policy will protect your home and belongings from are:

1. Fire or Lightning
2. Wind storm or Hail
3. Explosion
4. Riot or Civil Commotion
5. Aircraft
6. Vehicles(unless caused by the insured)
7. Smoke
8. Vandalism or Malicious Mischief
9. Theft (limit of liability on HO-8 is usually $1,000)
10. Volcanic Eruption

Important Perils That May Not Be Covered by Your Policy

Although all the policies vary in their coverage, it is common that they do not include protection from certain disasters. The most notable exceptions are:

1. Water Damage – Most policies (not all) have Sudden & Accidental water damage, but it omits any water damage relating to water backup, foundation, or slow leaks. Make sure you ask for riders or endorsements that will cover this cause of loss. It will cost extra on your premium, but might be worth the cost!
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2. Earthquake or Flood- Both of these are excluded from policies. However, both can be covered by endorsement of a separate policy for an extra premium.

If there is a peril that is not covered or the limits of your policy are too low, you can ask about adding a home insurance rider to your policy to make sure you get the appropriate coverage.

Buying the best homeowner’s policy requires that you understand the different types of homeowner’s policies above. Know your risk and discuss any risk with a reputable insurance agent that can guide you in making these decisions. To get a free, no-obligation quote on any of the types of homeowner’s policies above, click here and start shopping today.

Case Studies: Your Guide to the Types of Home Insurance Policies

Case Study 1: Limited Coverage With HO-1 Home Insurance Policy

John purchased an HO-1 home insurance policy, thinking it would be sufficient to protect his home. However, when his home was damaged by a peril not covered in the policy, he realized the limitations of this basic coverage. John faced difficulties in making necessary repairs and learned the importance of comprehensive coverage options.

Case Study 2: Comprehensive Protection With HO-5 Home Insurance Policy

Sarah opted for an HO-5 home insurance policy, seeking the most extensive coverage available. When her home and personal property were damaged by a peril not listed in the exclusion list, she was relieved to discover that her policy provided the protection she needed. Sarah experienced the benefits of an open perils policy and the peace of mind it offered.

Case Study 3: Ensuring Adequate Protection With HO-8 Home Insurance Policy

Robert owned an older home with unique construction methods, making it challenging to find suitable insurance coverage. He opted for the HO-8 home insurance policy, specifically designed for older homes with replacement cost considerations. Robert understood the importance of determining the right coverage for his home’s actual rebuilding cost, ensuring adequate protection.