Types of Homeowners Insurance

Eight main types of homeowners insurance exist. They’re typically identified by an acronym (HO for homeowners insurance) and a number. Whether you need an HO-1 policy, an HO-8 version, or something in the middle depends on your mortgage company, location, potential risks, and so much more. 

Understanding how each type of homeowners insurance works can help you make a smart decision. 

Understanding the Different Types of Homeowners Insurance 

Understanding the eight main types of insurance — and what they are called — can help you talk knowledgeably with an agent or company representative as you shop. 

Home Insurance Coverage Types

Abbreviation	Name	Coverage
HO-1	Basic form homeowners insurance	Basic, bare-bones coverage for homeowners
HO-2	Broad form homeowners insurance	Covers a broader array of risks than HO-1
HO-3	Special form homeowners insurance	Offers more comprehensive coverage that’s suitable for most homeowners
HO-4	Renters insurance	Coverage for people renting houses and apartments
HO-5	Comprehensive form homeowners insurance	Coverage includes damage caused by all perils unless listed as an exclusion
HO-6	Condo insurance	Provides coverage for a condo’s interior and belongings, plus damages not covered under the HOA’s policy
HO-7	Mobile home insurance	Similar to an HO-3 policy but for people who own manufactured or mobile homes
HO-8	Modified coverage form	For homes in which the cost of repairs may exceed those of other homes, such as historic or older homes

Peril Policies: How They Impact Your Homeowners Policy

In insurance, a peril is something that can cause damage to or loss of property, such as a fire, flood, or theft. All homeowners policies include rules about perils.

Policies can discuss perils in the following ways:

• Named. Your insurance policy documents list covered perils, and only damage or loss caused by these listed risks or events is covered.
• Open. Your insurance policy documents list covered perils, and only damage or loss caused by these listed risks or events is covered. 

In 2021, 5.3% of insured homes had a claim.[1] Many more homeowners suffered a loss that they couldn’t use their policy to replace or repair. Determining which perils are likely in your area — and how much you can afford to pay — is critical when shopping for insurance. If your area is prone to earthquakes, for example, standard insurance may not cover damages caused by this event. Instead, you may need to look into specialty insurance to ensure you have appropriate coverage for these perils.

Breaking Down Each Type of Homeowners Insurance 

You should choose a policy based on your housing type, your budget, and the coverage you find necessary.[2] Understanding coverage types can help you do just that.[3] 

HO-1 Policy: Basic & Limited Coverage for Homeowners

An HO-1 policy protects your home and personal belongings against a limited number of perils. People with small or no mortgages and few known risks may purchase a policy like this to save on premiums. 

A typical HO-1 policy will protect you against the following issues:

• Storm damage from lightning, wind, or hail 
• Fire or explosions, including smoke damage
• Falling objects 
• Theft and vandalism 
• Property damage caused by a vehicle crash

HO-1 policies typically cover named perils, so anything not explicitly mentioned within your insurance document isn’t covered. 

Mortgage companies require their clients to hold insurance policies that have enough coverage to protect their investment. The limited nature of an HO-1 policy may not offer enough protection if your mortgage represents a large portion of your property’s value. Lisa Koosis, a former claims specialist, explains, “If you have a home loan, your mortgage holder may require you to have specific coverage limits and/or deductibles, so be sure to check with your lender before purchasing a policy.”

HO-1 policies typically pay at actual cash value, which means that the payout will account for the home’s depreciation, and you might not get enough money to rebuild. It will also likely not cover damage to or loss of personal belongings such as jewelry, electronics, or furniture.

HO-2 Policy: Broad Coverage for Homeowners

An HO-2 policy builds on the protections offered in a typical HO-1 plan. People with relatively small mortgages but slightly higher known risks may spend more on an HO-2 plan to protect them financially if something terrible happens. 

With an HO-2 policy, you’ll be protected against all of the perils listed in an HO-1 plan. But you’ll have additional coverage for the following:

• Accidental water or steam discharge or overflow 
• Damage from frozen pipes
• Household system damage from electrical surges 
• Weight of snow, ice, or sleet 

HO-2 plans typically name covered perils. If something else happens to your home or property, it’s typically not covered. This type of policy does offer coverage of personal belongings and does provide personal liability coverage. However, like an HO-1 plan, it is also a cash value plan.

Coverage remains very limited, so all mortgage companies do not accept it. And some homeowners keep shopping to ensure they have more comprehensive coverage. 

HO-3 Policy: Most Common Coverage for Homeowners 

An HO-3 plan is a more detailed form of insurance for people who own their homes. These plans offer so much protection that they could be considered acceptable to mortgage companies, even when you owe a lot on your home. However, a mortgage company may specify coverage limits and deductibles.

HO-3 policies typically use an open-peril system to cover your home’s structure. Every peril that isn’t explicitly mentioned as an exclusion is covered. 

Common exclusions in these plans include the following:[2]

• Flooding
• Earthquake
• Neglect 
• War
• Nuclear accidents 
• Weather-related deterioration to fences, patios, and pools
• Insects and other pests
• Intentional damage

Purchasing additional plans for these specific perils isn’t prohibited. Doing so could be a smart way to ensure that your home is safe. Lisa Koosis, a former claims specialist, adds, “Additional protection can be particularly important if you live in an area at high risk for natural disasters such as earthquakes. Many insurers offer riders you can add on to a policy to protect you from damage caused by these events, so be sure to ask before purchasing a policy.” 

The vast majority of people who own their own homes choose this type of insurance to protect their investment.

HO-4 Policy: Designed for Renters 

People renting an apartment, house, or condo don’t need to protect the entire building when something goes wrong. Instead, they need coverage for their possessions, just in case their temporary home has an issue. 

Renters insurance policies typically cover named perils, such as the following:

• Fire or smoke damage
• Theft 
• Hail, windstorms, and lightning damage 

These plans cover personal property (your belongings) and liability and medical payments to others harmed on your property. They may also cover living expenses incurred if you have to vacate the property temporarily due to damage.

They’re not required for everyone, but they can be a good investment in case something unexpected happens. Lisa Koosis, a former claim specialist, suggests, “When you’re moving into a new apartment, ask the management company if they partner with a renter’s insurance provider. Sometimes, you can save money this way by getting a reduced group rate.”

HO-5 Policy: Comprehensive Coverage for Homeowners 

Homeowners who want detailed protection for their property and belongings can choose an HO-5 plan. This is the most comprehensive type of homeowners insurance.

Like an HO-3 policy, HO-5 plans will cover any type of peril that’s not explicitly excluded. But unlike HO-3 plans, HO-5 uses an open-peril policy for your belongings and your home. 

HO-5 plans often have higher payouts too. After a covered peril, an HO-3 policy will replace your item’s actual value. An HO-5 policy will pay the fee you need to replace it (which could be higher than the value).

Because HO-5 policies are so comprehensive, they tend to be more expensive. Sometimes, homeowners determine the added cost isn’t worth the extra peace of mind. 

HO-6 Policy: Protection for Owners of Condos & Co-Ops 

People who purchase a condo or co-op are legally responsible for the items within their walls as well as the interior structure itself. This includes the walls, ceiling, and floors inside the unit. Anything that isn’t covered by your organization’s HOA policy (like your possessions or damage you cause another on your property) should be included within your HO-6 policy. 

Some HO-6 policies included named perils, but others use an open-peril system to cover almost anything. Coverage can vary widely from plan to plan, depending on your HOA rules and existing protection within them. Your agent should review those documents when creating your policy. A mortgage lender may also require specific coverage criteria, such as maximum deductibles.

HO-7 Policy: Protection for Owners of Mobile & Manufactured Homes 

People who own mobile and manufactured homes need specialized policies that cover the items they own — not the parts they do not. For example, you may own your trailer and everything inside of it. But you may rent the space it sits on and the plumbing that connects it to your city. 

Most HO-7 policies have open-peril plans, very similar to an HO-3 level of coverage. Some protect both your home and detached structures (like sheds). And most offer liability protection too. 

These policies don’t cover mobile homes while they’re in transit. For example, if you live in a trailer, you’ll be covered while it’s parked on your lot, but you won’t be covered if you drive it to a new location. 

HO-8 Policy: Protection for Homeowners With Older Structures

Homes that are 40 years or older often need more protection than their younger counterparts. An HO-8 policy provides this level of care and consideration. This type of insurance covers houses that are considered historic or registered landmarks. These types of homes may require more money to repair because repairs may have to meet standards set by state or local ordinances. This may also be true for houses that have architectural significance, such as a home that was built by a prominent architect or exemplifies a certain architectural style.

If you own an older home, damage or destruction could cost more to fix or replace. Newer materials (like drywall) can’t substitute for the originals (like lathe and plaster). With an HO-8 policy, you’ll account for these special circumstances. 

Most HO-8 policies use named perils, and they’re typically the same as those listed in an HO-1 version. 

Which Type of Homeowners Insurance Is Right for Me?

Your home is an important asset, whether you rent or own it. Finding the right policy is crucial, and it’s smart to take your time. A good insurance agent should listen to your goals and answer your questions, so you can make an informed choice. They can also help you shop around and compare insurers.

This table can help you understand common factors people consider when choosing one policy over another:

Policy	Ideal buyer	Why?
HO-1	Homeowner with a small mortgage and budget	Limited coverage may not be enough for mortgage companies, but it can be the cheapest option for homeowners.
HO-2	Homeowner with moderate mortgage and budget	Limited coverage can leave homeowners unprotected, but you could save money on premiums.
HO-3	Standard homeowners	This offers a good balance of coverage and premium price.
HO-4	Renters	Policies are written with the needs of renters in mind.
HO-5	Homeowner with an extended budget who want the most complete coverage	Expansive coverage offers significant protection, but costs are higher.
HO-6	Homeowners with condos or co-ops	Policies are written with the needs of condo and co-op owners in mind.
HO-7	Homeowners with mobile or manufactured homes	Policies are written to meet the needs of people who own mobile or manufactured homes.
HO-8	Homeowners with homes that are at least 40 years old	Policies offer more appropriate protection for older or historic homes.