Understanding Your HO-1 Policy

• Published Feb 4, 2024 • Reviewed and Fact Checked Our content is reviewed and fact-checked by unbiased insurance professionals to ensure the accuracy, quality and reliability of the information we provide. by Kristopher Kane • 4 cited sources

An HO-1 policy is the most basic type of homeowners insurance you can buy. Instead of covering all perils that aren’t explicitly excluded, HO-1 policies only covered named perils.

Therefore, this type of coverage isn’t nearly as comprehensive as HO-3 or HO-5 insurance. However, an HO-1 policy may make sense in certain situations.

Key Facts

  • An HO-1 policy is the most basic type of homeowners insurance available.
  • HO-1 policies only cover named perils, which are the perils listed on your declarations page.
  • Many insurance companies no longer offer HO-1 policies due to their limitations.

What Is an HO-1 Policy?

HO-1 homeowners insurance protects you against specific perils, such as fire, theft, vandalism, and certain natural disasters. Since it only covers perils specifically named in your policy, HO-1 insurance is often referred to as named-peril coverage.

Due to the limited amount of coverage available, HO-1 insurance costs less than other types of homeowners insurance. However, it doesn’t give you as much protection. Therefore, HO-1 coverage is best for homeowners with limited budgets.

What Coverage Does an HO-1 Policy Include?

HO-1 homeowners insurance provides essential protection for the following named perils:

  • Fires: Homeowners insurance typically covers structural damage caused by smoke and flames. For example, if flames destroy some of the support beams in your home, your insurance company may pay for repairs.
  • Windstorms: HO-1 insurance usually covers damage caused by high winds. For example, if the wind rips off part of your roof, your insurance company may pay to have a professional roofer make repairs.
  • Hail: Although homeowners insurance doesn’t cover cosmetic damage, an HO-1 policy may cover hail damage that affects the structural integrity of your home.
  • Lightning: If lightning hits your home, it may cause significant damage to built-in appliances or electrical systems [1]. HO-1 policies typically cover this type of damage.
  • Explosions: HO-1 insurance covers the damage resulting from certain types of explosions. For example, it’s possible for a defective furnace to explode, putting your home’s structural integrity at risk. Your insurance company may also pay for damage caused by an explosion at a nearby home or business. HO-1 insurance typically doesn’t cover explosions resulting from intentional acts, illegal activities, acts of war, or nuclear hazards.
  • Vehicle damage: If someone runs into your home with a vehicle, your HO-1 policy may cover the resulting structural damage.
  • Riots/civil commotion: Riots and civil commotions involve gatherings of people in public places [2]. Your HO-1 policy will likely cover structural damage caused by these events.
  • Theft/vandalism: HO-1 insurance also covers damage associated with theft or vandalism, which is defined as intentional property destruction or defacement [3].
  • Volcanic eruptions: Typically, an HO-1 policy covers structural damage caused by volcanic blasts, lava flow, ash, or shockwaves. It generally won’t cover damage from earth movement, such as an earthquake or landslide [4].
  • Aircraft damage: In the unlikely event that an airplane crashes into your house, an HO-1 policy should cover the resulting structural damage.

Dwelling Coverage vs. Contents Coverage

An HO-1 policy typically includes dwelling coverage only. Dwelling coverage applies to the structure of your home, including the foundation, walls, roof, and frame. This type of insurance generally doesn’t cover the contents of your home, including personal property, such as computers, clothing, jewelry, and furniture.

Filing a Claim Under Your HO-1 Policy

Due to the limited coverage available under an HO-1 policy, you may have to provide extensive documentation to support any claims. Even if your insurer approves your claim, you may receive far less than you need to make repairs.

What Isn’t Covered by an HO-1 Policy?

HO-1 insurance only covers the ten named perils described above. These aren’t the only perils that have the potential to damage your home, however, so it’s important to understand what’s excluded.

An HO-1 policy doesn’t cover these perils:

  • Water damage: If your water heater leaks or one of your pipes bursts, your HO-1 policy won’t cover the resulting damage.
  • Flooding: Standard homeowners insurance doesn’t cover flooding. If you live in a high-risk flood area, consider purchasing a separate flood insurance policy.
  • Freezing: If your heating system fails or you don’t turn the thermostat high enough in the winter, your pipes may freeze. It’s also possible for an A/C unit to freeze over, causing it to malfunction. HO-1 insurance doesn’t cover damage associated with freezing.
  • HVAC and water system damage: If your sprinkler system, water heater, or HVAC system malfunctions due to sudden cracking or tearing, your HO-1 policy won’t pay for repairs.
  • Sewer backups: A sewer backup may cause raw sewage or contaminated water to come up through your plumbing system. HO-1 insurance doesn’t cover this type of damage.
  • Pet damage: HO-1 insurance typically doesn’t cover damage caused by cats, dogs, and other pets. For example, if your dog chews off part of the wall in your living room, your insurance company won’t pay for repairs.
  • Falling objects: HO-1 insurance doesn’t cover damage caused by falling objects. For example, if a tree branch falls on your home, your insurer won’t cover the cost of repairs.

Additionally, HO-1 insurance doesn’t include the following coverage:

  • Damaged personal belongings: Your HO-1 policy covers theft, but it doesn’t cover damaged personal belongings, even if the damage results from a covered peril.
  • Liability: Some types of homeowners insurance include liability coverage, which protects you if someone in your household causes bodily injury or property damage. HO-1 policies don’t include this type of coverage.
  • Additional living expenses: If you have to move out of your home due to the damage caused by a covered peril, your HO-1 policy won’t cover any of your temporary living expenses.

As a reminder, HO-1 insurance doesn’t cover the following:

  • Earth movement (earthquakes, landslides, sinkholes, mudslides)
  • Floods
  • Acts of war
  • Nuclear accidents

Factors Affecting the Cost of HO-1 Homeowners Insurance

Many factors affect the cost of HO-1 insurance:

  • Location of your home
  • Value of your property
  • Age of your home
  • Size and condition of your home
  • Local rebuilding costs
  • Your insurance history and credit score

One way to limit your expenses is to choose a policy with a high deductible. A deductible is the amount of money you must pay out of your own pocket before an insurance company starts covering any expenses.

For example, if you have a $2,500 deductible, you must pay the first $2,500 of any claim. If you choose a high deductible, your insurance company doesn’t have to take on as much risk, so your insurance premium will likely be lower.

Is an HO-1 Policy Right for You?

HO-1 insurance doesn’t provide comprehensive coverage, but it may be right for you under one of the following circumstances:

  • You have a small budget and need the most affordable homeowners insurance available.
  • Your home doesn’t meet the requirements for other types of insurance.
  • You have enough cash on hand to pay for repairs caused by perils that aren’t covered by your HO-1 policy.

In general, HO-1 insurance is best for homeowners who are comfortable assuming the risk of additional perils and want to minimize their annual insurance costs. Due to the limited amount of coverage available, many insurance companies no longer offer this type of coverage. Even if HO-1 coverage is available in your state, your mortgage company may require you to purchase something more comprehensive, such as an HO-3 or HO-5 policy.

HO-1 Policies vs. Other Types of Coverage

If HO-1 insurance doesn’t meet your needs, you may benefit from purchasing an HO-2, HO-3, or HO-5 policy. HO-2 insurance includes a bit more coverage, but it’s still rather limited. In contrast, HO-3 and HO-5 policies cover your home and its contents on an open-peril basis. 

When you have open-peril coverage, you’re covered for any peril that isn’t specifically excluded from your policy. This gives you much broader coverage than HO-1 insurance, which only covers named perils. Additionally, HO-3 and HO-5 policies typically cover personal property and additional living expenses.

Understanding Your Insurance Options

Overall, HO-1 coverage is only appropriate in a limited set of circumstances. Before you purchase homeowners insurance, make sure you consider the value of your personal belongings, your level of risk tolerance, and your insurance budget. You may find that HO-3 or HO-5 insurance better fits your needs.

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Reviewed by Kristopher Kane

Kristopher Kane is a career freelance writer with over 15 years of experience and a broad portfolio encompassing various topics within the insurance industry. He has written for both B2B communication and consumer-level customer engagement.