Homeowner’s insurance is vital to protecting your home and possessions — whether it’s from natural disaster, burglary, accident, or any other perils.
But when you’re trying to find out what kind of homeowner’s insurance is right for you — particularly if you’re a first-time homeowner — the number of options and details can be confusing or even overwhelming.
But not to worry — we’re going to demystify the various types of homeowner’s insurance policies with a clear breakdown of each one and tell you what things to look for when deciding which one is best for your needs.
HO-1 Basic Form
The HO-1 Basic Form is just that: basic. It’s the simplest type of homeowner’s insurance policy, but also the most limited.
The HO-1 provides coverage for a specific list of known perils; namely fire, theft, vandalism, and some forms of weather damage.
The HO-1 is an adequate policy, but many homeowners might find it doesn’t cover quite as much as they need.
Because it’s so limited, it rarely comes recommended by insurers. The only major advantage to an HO-1 is the price point, which will naturally tend to be lower than that of other policies.
HO-2 Broad Form
The HO-2 Broad Form can be thought of as an “upgrade” to the HO-1. It provides more coverage against a wider range of events, known as the 16 perils:
- Accidental overflow of water or stream (not to be confused with flood insurance)
- Falling objects
- Fire or lightning
- Hail or windstorm
- Riot or civil commotion
- Sudden, accidental damage from an electrical current
- Sudden, accidental tearing apart, cracking, burning, or bulging of a built-in appliance (for example, a water heater)
- Volcanic eruption
- Weight of ice, sleet, or snow
HO-3 Special Form
In terms of homeowner’s insurance, the HO-3 Special Form is the most popular policy, and tends to ge tbe most recommendations from insurance carriers.
The HO-3 protects against all but a specifically excluded set of perils (often including earthquakes or floods), extending to both the structure and personal belongings of the policyholder.
This is the most comprehensive policy available under most circumstances.
HO-4 Contents Broad Form (Renters Insurance)
The HO-4 is aimed at people who rent rather than own: it protects the personal property of the tenants, but provides no coverage for the physical structure of the apartment, which would be the owner’s responsibility. The H0-4 covers things like vandalism, fire, and theft.
HO-5 Comprehensive Form
The HO-5 is basically an “upgrade” of the HO-3. It covers the dwelling and personal possessions of the policyholder from all perils and risks, unless some are specifically excluded.
This policy is aimed at homeowners who have high-value items in their home that require protection above and beyond the norm.
HO-6 Unit-owners Form (Condo Insurance)
A cousin of the HO-4, the HO-6 is intended for condominium owners. This policy is focused on covering liability within the condo unit as well as personal property and improvements made to the unit.
An HO-6 will not cover common areas of the condominium or the property itself — once again, that’s the responsibility of the owner.
HO-7 Mobile Home Form
Another specialized form aimed at mobile and manufactured homes, the HO-7 covers damage to the mobile home itself, detached structures on the property like garages or sheds, personal belongings inside the mobile home, and legal / medical expenses.
Many policies also provide coverage for a place to stay in case the home becomes uninhabitable at some point.
HO-8 Modified-Coverage Form
Finally, there’s the HO-8, which is designed for older, high-risk homes. Many older homes can develop structural issues and problems with electricity and plumbing that make them a higher risk for insurers. An
HO-8 is much like other homeowner’s insurance policies, but makes modifications to account for the higher replacement costs and difficulties, providing adequate coverage for the home’s unique needs.
How Can You Select The Right Type Of Home Insurance?
When deciding on a home insurance policy, there are a number of factors to consider: your location, potential risks, personal belongings, and (perhaps most importantly) your budget.
Conducting thorough market research is crucial to the process before you make any major decisions.
Kristine Lee at comparison site The Zebra has some suggestions about getting home insurance quotes and what kind of questions you should ask yourself before choosing a policy. Do you need special earthquake or flood insurance?
Do your personal possessions warrant a more expensive policy? Lee also lists a checklist of information you should gather, such as square footage, the number of stories and bathrooms, pet information, claims history, and more.
Your home is one of the biggest and most valuable investments you’ll ever make in your life — it’s important to make sure that investment is adequately covered, so that you and your property are well-protected.