Types of homeowners insurance

Your guide to the different types of homeowners insurance.

Pat Howard 1600

Pat Howard

Published September 21, 2018

When you think about the type of homes that need “homeowners insurance”, a big ole house in the suburbs is probably what springs to mind, but spacious family dwellings aren’t the only type of home that needs insurance.

Homeowners insurance is for your house, apartment, condo, mobile home, tiny home, historical homes and landmarks, it's for the apartment you’re renting and even property you’re renting to someone else. There are eight types, or “forms”, of homeowners insurance:

If you own a home

  • HO1 - limited coverage policy
  • HO2 - basic policy
  • HO3 - most common policy
  • HO5 - most comprehensive policy
  • HO8 - older homes policy

** If you rent your home**

  • HO4 - renters policy

If you own a co-op or condo

  • HO6 - condo policy

If you own a mobile home

  • HO7 - mobile home policy

If you own a home

HO1: Basic form

A basic form homeowners insurance policy is the most limited from a coverage standpoint. This is a named peril policy, meaning it only covers perils specifically outlined in your policy, which for HO1 policies is a measly 10:

  • Fire or smoke
  • Explosions
  • Lightning
  • Hail and windstorms
  • Theft
  • Vandalism
  • Damage from vehicles
  • Damage from aircraft
  • Riots and civil commotion
  • Volcanic eruption

The other limiting factor to consider with HO1 policies is that they usually don’t include personal property coverage or personal liability coverage, and the rare HO1 that does cover your personal belongings usually only covers items which you specified at the time you purchased the policy.

HO1 policies aren’t usually offered anymore, as more comprehensive policy types aren’t too much more expensive and give you a much bigger bang for your buck. In fact, you’d be hard-pressed to find a state that still offers basic form policies.

HO2: broad form

A broad form policy is far more common than basic form policies and covers the same perils, plus:

  • Accidental discharge or overflow of water or stream
  • Falling objects
  • Freezing of household systems like AC or heating
  • Sudden and accidental damage from an artificially generated electrical current
  • Sudden and accidental tearing apart, cracking, burning, or bulging of pipes and other household systems
  • Weight of ice, snow, or sleet

In addition to dwelling coverage, HO2 policies typically cover your personal belongings and sometimes even your personal liability. Like HO1 policies, HO2s are named peril policies, so any damage or loss caused by conditions not explicitly named in the policy will be excluded from coverage.

HO3: special form

HO3 policies, or “special form” policies, are the most common home insurance policies and are typically what we refer to when we talk about what homeowners insurance is or what’s covered in a basic policy. These policies are generally affordable and are comprehensive open peril policies, meaning they cover everything except conditions specifically outline in the policy. Common exclusions you should expect to see in an open peril policy are:

  • Earth Movement
  • Ordinance of law
  • Water damage (although sudden and accidental water damage is included)
  • Power failure
  • Neglect
  • War
  • Nuclear hazard
  • Intentional loss
  • Government action
  • Collapse (some coverage may be provided in your policy)
  • Theft to a dwelling under construction
  • Vandalism or malicious mischief (only if vacant more than 60 days)
  • Mold, fungus, or wet rot (some coverage may be provided in your policy)
  • Wear & tear, deterioration
  • Mechanical breakdown
  • Smog, rust & corrosion
  • Smoke from agricultural smudging and industrial operations
  • Discharge, dispersal, seepage of pollutants
  • Settling, shrinking, bulging, or expanding
  • Birds, vermin, rodents, insects
  • Animals owned by insured

HO3 policies typically include all six of the core coverages:

Dwelling Other structures Personal property Loss of use Personal liability Medical payments to others

What is and isn’t covered varies by insurer, so you’ll want to go over everything with your agent to be sure, but floods, mudslides, and earthquakes are almost never covered in an HO3 policy.

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HO5: comprehensive form

Comprehensive form policies are the most expansive homeowners insurance policies, but also the most expensive. These policies are strikingly similar to HO3 policies, but with a few key differences:

HO5 reimburse both dwelling and personal property coverage claims on a replacement cost value (RCV) basis, which pays to replace the property. (HO3 policies can vary depending on the insurer, but many are actual cash value (ACV) policies, which pay you the replacement amount minus depreciation). HO3 policies are open peril for dwelling, but named peril for personal property. HO5 are open peril for both dwelling and personal property. HO5 policies have expanded limits for losses and damages to valuable items like jewelry, fine furs, and electronics.

HO5 policies are generally for newer homes in a relatively low-risk areas with high value relative to the rest of the state. Check with your insurer, but if the price difference doesn’t differ all that much between HO3 and HO5 policies, it's definitely worth the slight cost increase to buy an HO5.

HO8: older home form

Designed for homes, HO8 home insurance policies are designed for homes which are:

  • Over 40 years old

  • Don’t meet all of the structural and cosmetic update requirements that are commonly found in HO3 policies. If you own an older home, you’ll typically need to make updates to the: HVAC, electrical, plumbing and roof in order to qualify for an HO3 policy.

Similar to HO1 basic form policies, HO8s are named peril plans that only provide coverage for 10 perils and reimbursement is determined by the properties’ actual cash value – meaning the replacement cost minus depreciation – rather than a replacement cost value (RCV) – which reimburses you with the amount it would cost to replace damaged or stolen property without a deduction for depreciation.

The one inkling of value in HO8 policies is that your home can be covered without full updates or a four point inspection, so if you’re intent on keeping the home exactly the way it was when it was first built two generations prior, this policy may be for you.

If you rent your home

HO4: Tenant’s form

Better known as renters insurance, HO4 policies are created specifically for those who rent the home or apartment where they live. It protects your possessions and any other parts of the apartment that you own, including cabinets or fixtures which you bought and installed.

Renters insurance covers the same 16 perils as an HO2 broad form policy and has all the same core coverage components of an HO3 special form policy except dwelling coverage, as renters are not responsible for the house or apartment building structure. That’s covered by the landlord’s insurance.

If you own a co-op or condominium

HO6: Condo form

Also known as condo insurance, an HO6 policy is for people who live in a condominium or co-op. The amount of coverage in your condo policy can vary, as it depends on how robust your condo association’s master policy is.

The master policy covers the structure of the building and may cover the building’s common areas, but it doesn’t always cover the interior structure of your apartment or built-in appliances like cabinetry or bathroom fixtures. For that, you may need to purchase your own dwelling coverage, in addition to personal property, loss of use, personal liability, medical payments, and loss assessment coverage.

If you own a mobile home

HO7: Mobile home form

Mobile home insurance is virtually identical to HO-3s, but are designed specifically for mobile homes, which don’t fall under normal homeowners insurance coverage.

The type of mobile homes covered under HO7 policies include, but aren’t limited to:

  • Trailers, travel trailers, fifth-wheel trailers
  • Single-wide manufactured and single-wide mobile homes
  • Double-wide manufactured and double-wide mobile homes
  • Sectional homes
  • Modular homes
  • Park model homes and RVs

The size of your home may affect your policy’s cost.

If you own, rent, or lease out your home but don’t know what type of home insurance you need, Policygenius will guide you toward a plan that makes the most sense for you.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.