The Different Types of Home Insurance Policies Explained

When it comes to safeguarding your home, selecting the right insurance policy is essential. Home insurance isn’t a one-size-fits-all solution—there are several types of policies available, each designed to meet different needs and coverage requirements. Understanding these options helps ensure your property, belongings, and liability are adequately protected.

HO-1: Basic Form

The HO-1 policy is the most limited and least common type of home insurance. It provides protection against a set list of perils, such as fire, lightning, windstorms, and theft. However, it excludes many other potential risks, which makes it less appealing to most homeowners. This policy type is often not accepted by mortgage lenders due to its limited scope.

HO-2: Broad Form

An upgrade from the basic form, HO-2 policies offer broader coverage. This includes all the perils listed in HO-1, plus others like falling objects, the weight of snow or ice, accidental water overflow, and electrical damage. While more inclusive, it still operates on a named-peril basis—if the event isn’t specifically listed, it’s not covered.

HO-3: Special Form (Most Common)

HO-3 is the most commonly purchased form of homeowners insurance. It provides “open-peril” coverage for the structure of your home, meaning it protects against all risks except those specifically excluded (like earthquakes and floods). For personal belongings, it typically still uses a named-peril approach. This balance of broad coverage and reasonable cost makes it the go-to policy for many property owners.

HO-4: Renter’s Insurance

This type is specifically designed for tenants. HO-4 policies cover personal property and liability, but not the structure itself since that remains the landlord’s responsibility. Renter’s insurance can also cover additional living expenses if the rental becomes uninhabitable due to a covered peril.

HO-5: Comprehensive Form

HO-5 policies are among the most comprehensive options available. They offer open-peril coverage for both the home and personal belongings. These policies often include higher coverage limits and fewer restrictions, making them ideal for high-value homes or those who want maximum protection. However, they usually come with a higher premium.

HO-6: Condo Insurance

Tailored for condo owners, HO-6 policies cover the interior structure of the unit, personal belongings, and liability. The condo association typically carries a master policy that covers shared spaces and the building’s exterior, so HO-6 fills in the coverage gap for the unit itself.

HO-7: Mobile Home Insurance

Mobile or manufactured homes require specific coverage due to their construction and mobility. HO-7 policies are similar to HO-3 in terms of structure and content coverage but are adapted for mobile homes. They provide protection against a wide range of perils, including damage during transport in some cases.

HO-8: Older Home Coverage

HO-8 policies are designed for homes that may not meet modern building standards, typically older or historic properties. These policies cover the cost of repairs using materials that match the original construction, rather than upgrading to current standards. Since older homes may be more expensive to repair, HO-8 helps preserve their value while offering basic protection.

Choosing the Right Policy

To determine the most suitable policy, assess your home type, its value, and your personal risk tolerance. For example:

• New homeowners often choose HO-3 for balanced coverage.

• Condo residents will need HO-6 to complement the association’s insurance.

• Renters should consider an HO-4 to protect their belongings affordably.

• Owners of high-value homes may benefit from HO-5 for its extensive protection.

It’s also crucial to review what each policy excludes. Standard policies do not cover floods or earthquakes—these require separate endorsements or policies. Optional add-ons like replacement cost coverage or scheduled personal property can enhance protection based on your specific needs.

Understanding the different types of home insurance policies empowers you to make informed decisions about protecting your most valuable asset. Whether you’re a renter, a first-time homebuyer, or the owner of a historic property, there’s a policy tailored for your situation. Be sure to review coverage details, exclusions, and available endorsements with a licensed agent to ensure you’re fully protected.