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 ownership type, estate, 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 different types of insurance — and what they are called — can help you talk knowledgeably with an agent as you shop.
Home Insurance Coverage Types
Abbreviation | Name | Coverage Details |
HO-1 | Basic form | Basic, bare-bones coverage for homeowners |
HO-2 | Broad form | More protection than HO-1 for homeowners |
HO-3 | Special form | More protection than HO-2 for homeowners |
HO-4 | Contents broad form | Coverage for people renting houses and apartments |
HO-5 | Comprehensive form | More protection than HO-3 for homeowners (the most comprehensive option available) |
HO-6 | Unit-owners form | Coverage for people who own a condo or co-op |
HO-7 | Mobile home form | Coverage for people who own a manufactured or mobile home |
HO-8 | Modified coverage form | Coverage for people who own older or historic homes |
Peril Policies: How They Impact Your Homeowners Policy
All types of homeowners insurance include rules about issues (or perils) that the plan will or will not cover.
Policies can discuss perils in the following ways:
- Named: Your insurance covers issues that are outlined in the policy and nothing more.
- Open: Your insurance covers everything aside from specific situations named as exclusions.
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.
You could handle perils by adding specific riders or new policies (like flood insurance). But examining the list could also prompt you to buy a more comprehensive plan.
Breaking Down Each Type of Homeowners Insurance
Organizations like the Virginia State Corporation Commission say 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
- Falling objects
- Theft and vandalism
HO-1 policies typically cover named perils, so anything not explicitly mentioned within your insurance document isn’t covered.
In 2020, 1.72% of homeowners had an HO-1 policy.[4] Mortgage companies could be responsible for this low number.
Mortgage companies require their clients to hold insurance policies that 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.
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 keep them safe 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
- Falling objects
- Damage from electrical current
- 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.
In 2020, 6.41% of homeowners had this type of insurance protecting their homes[4]. 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.
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 damage to fences, patios, and pools
Purchasing additional plans for these specific perils isn’t prohibited. Doing so could be a smart way to ensure that your home is safe.
In 2020, 78.3% of homeowners had an HO-3 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.
Of policies written for tenants or condo owners, 75.39% were HO-4 policies.[4] They’re not required for everyone, but they can be a good investment in case something unexpected happens.
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).
Since 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.
In 2020, 13.14% of homeowners had an HO-5 policy protecting their estates.[4]
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. 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.
In 2020, 24.61% of policies written for tenants and condo owners were of the HO-6 type.[4]
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.
The National Association of Insurance Commissioners doesn’t track how often people buy HO-7 plans.[4]
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.
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.
In 2020, less than 1% of homeowners had an HO-8 plan protecting their homes.[4]
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.
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 homes. |
Sources
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Facts and Statistics: Homeowners and Renters Insurance. Insurance Information Institute.
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Homeowners Insurance Consumer’s Guide. (2020). Virginia State Corporation Commission.
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Homeowner’s Insurance. Florida Office of Insurance Regulation.
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Dwelling Fire, Homeowners Owner-Occupied, and Homeowners Tenant and Condominium/Cooperative Unit Owner’s Insurance Report: Data for 2020. (2022). National Association of Insurance Commissioners.
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Homeowners Insurance. National Association of Insurance Commissioners.