Types of Homeowners Insurance Policies

Understanding how homeowners insurance policies work can be helpful for every homeowner. A home is not just a place to live; it's an investment and can be a source of security. Knowing the different types of homeowners insurance policies which may be available can help a homeowner safeguard their assets. Let's explore eight common types of homeowners insurance policies:

1. HO-1: Basic Form

The HO-1 policy, often referred to as the Basic Form, generally only offers limited coverage. While the terms and conditions of each policy will vary, it typically covers a narrow range of perils, such as fire and lightning. While it may serve as a homeowners insurance option, it may leave gaps in coverage, making it less popular among homeowners seeking more comprehensive protection.

2. HO-2: Broad Form

The HO-2 policy, referred to as the Broad Form, provides broader coverage than the HO-1 policy. While the terms and conditions of each policy will vary, it typically includes coverage for a more extensive list of perils, such as damage from falling objects or the weight of ice and snow. This increased coverage makes it a more attractive option for many homeowners.

3. HO-3: Special Form

The HO-3 policy, referred to as the Special Form, is often considered the most common type of homeowners insurance. HO-3 typically offers coverage for a wider range of perils. It may be seen as a balance of affordability and protection, making it a popular choice for homeowners. Although the terms and conditions of each policy will vary, commonly excluded perils may include floods and earthquakes, highlighting the importance of additional coverage options.

4. HO-4: Contents Broad Form (Renters Insurance)

The HO-4 policy, also referred to as the Contents Broad Form or Renters Insurance, is designed for renters rather than homeowners. While it does not cover the rented structure itself, it helps to cover losses to personal property and can include personal liability coverage.

5. HO-5: Comprehensive Form

The HO-5 policy, referred to as the Comprehensive Form, typically offers more extensive coverage for both the dwelling and personal property than the other options above. This policy is often considered an “upgrade” from the HO-3 policy due to its broader range of covered perils. If a homeowner is seeking comprehensive protection for their home and belongings, the HO-5 policy may be a good option to consider.

6. HO-6: Unit-Owners Form (Condo Insurance)

Specifically designed for condo owners, the HO-6 policy typically covers the interior structure of the condo unit and the personal property inside it. Also referred to as the Unit-Owners Form, HO-6 policies complement the master policy held by the condo association. Condo owners should carefully review their association's policy to understand the extent of coverage needed.

7. HO-7: Mobile Home Form

Owners of mobile or manufactured homes can opt for the HO-7 policy, designed to protect the structure as well as personal property. It typically offers coverage tailored to mobile and manufactured homes' unique characteristics and risks.

8. HO-8: Modified Coverage Form (Older Homes)

For owners of older or historical homes which may not qualify for standard coverage, the HO-8 policy, also referred to as the Modified Coverage Form, may be a suitable choice. This type of policy typically covers losses at the actual cash value (or depreciated value), rather than replacement cost, and commonly only covers a list of specifically enumerated hazards. It can nevertheless be a valuable option for helping to preserve the character of older properties.