What Are The Different Types of Home Insurance?

Nov 1, 2020 | Personal Insurance

Home Insurance or Homeowner’s Insurance is property insurance that covers a private residence.  It is a combination of various personal insurance types, which may include losses that happen to one’s home, its contents, loss of use (which may mean additional living expenses while the insured property is being fixed), or loss of other personal effects of the homeowner, as well as liability insurance for unfortunate events that may occur at the home or the hands of the homeowner within the premises indicated in the policy. It also protects in case the insured and/or a family member is/are held accountable for injuries to other people or damage to a visitor’s possessions while they are on the policy holder’s premises. Of course, as a homeowner, you have choices when it comes to the types of coverage you want for your property. 

Home Insurance or Homeowner’s Insurance are composed of 8 different types of coverage:

HO-1 Basic Form

An HO-1 or also known as “basic form” is the most basic form of homeowner’s insurance policy, and typically offers coverage and help on your home for 10 specific perils such as:

  1. Fire and lightning
  2. Windstorm and hail
  3. Explosion
  4. Riots and civil commotion
  5. Aircrafts
  6. Vehicles
  7. Smoke 
  8. Vandalism and malicious mischief
  9. Theft
  10. Volcanic eruptions

Most HO-1 policies also protect against volcanic eruptions, civil unrest, lightning, and even windstorms. For most homeowners, especially those looking for the most affordable coverage, these types of insurance policies are a great place to start. Keep in mind that these policies do not protect you from liability if someone is injured on your property.

HO-2 Broad Form

An HO-2 or “broad form”, also provides limited coverage. It’s called a “broad form” because it may help cover a broader range of perils than the HO-1. Generally, HO-2 covers more events than HO-1 it provides protection damage from damage resulting from frozen pipes, water heaters, power surges, and steam from appliances. This coverage is more comprehensive but not as much as an HO3, and similar to an HO1, an HO2 policy also excludes coverage for floods and earthquakes. 

It also protects your home and personal belongings against six additional perils, including:

  • Weight if ice, snow, or sleet
  • Accidental discharge or overflow of water or steam
  • Sudden and accidental tearing apart, cracking, burning, or bulging of a built-in appliance like a water heater or centralized air conditioner or heating system
  • Freezing
  • Sudden and accidental damage from an artificially generated electrical current
  • Volcanic Eruption

HO-3 Special Form

The HO-3, also known as the “special form” is the most known or most popular homeowner’s insurance policy, because not only it offers coverage but it also protects you, your family, and your property that includes your things against several bad situations. Your insurer only pays for damage caused by events listed in the policy or the HO-3. However, it offers named-perils coverage for your private property, meaning it only covers damage to belongings caused by the circumstances listed in your policy. Named perils are a host of unfortunate things listed out in your policy that could happen to your personal property. They apply to direct, physical loss or damages so, such as, if a fire broke out (a named-peril) ruining to your couch, TV, and computer, you could file a claim and your insurance carrier would financially help you out. 

Commonly excluded perils may include:

  • Ordinance or law
  • Earth movement
  • Water damage from flooding, sewer backups, or water that seeps up from the ground
  • Power failure
  • Neglect
  • War
  • Nuclear hazard
  • Intentional loss
  • Government action
  • Theft to a dwelling under construction
  • Vandalism or malicious mischief
  • Fungus or wet rot
  • Wear and tear
  • Mechanical breakdown
  • Smog, rust or other corrosion
  • Smoke from agricultural smudging and industrial operations
  • Discharge, dispersal, seepage of pollutants
  • Settling, shrinking, bulging, or expanding or parts of the structure like your foundation or walls
  • Birds, rodents, or insects
  • Animals owned by insured

Your HO-3 policy includes 6 different coverage areas. First is your house that is referred to as ‘dwelling coverage,’ this protects you from damages to your home and everything attached to it, such as your garage, chimney, in-ground pool, etc. Then other structures on your property which covers the additional things like your driveway, fences, sheds, and other structures that are not attached to your house. Next is your personal property which is generally referred to as the stuff you own. This coverage deals with your belongings such as furniture, appliances, and other personal possessions from damage or theft. Fourth is the additional living expenses, if one of those pesky perils happens and your place becomes uninhabitable, you’d be covered under ‘loss of use’, and your insurance company may help pay for a place to stay temporarily and essential living expenses like food, laundry, parking, etc. A deductible never applies to this coverage. The fifth is the personal liability that refers to the things you’re responsible In the insurance arena, this means if for some reason someone gets injured on your property and it’s your fault, or you/anyone named in your plan causes damage to someone else’s property or personal belongings, your insurance company would have you covered. Lastly, the medical fees that cover injuries sustained by guests who may have gotten injured at your place or people you may have accidentally hurt outside of your home as well.

If the following things happen to your property, you’ll be able to file a claim and receive compensation from your insurer, minus your deductible, if it’s approved. Keep in mind that if one of these perils happens to your stuff outside of your home, you’ll also be covered. Also, the policies provide liability protection. If anyone is injured on your property or you accidentally do damage to your neighbor’s property, the policy will help cover the cost of repairs.

HO-4 Contents Broad Form

Also known as “renters insurance”, HO-4 policies are created specifically for those who lease homes, apartments, or condos. Renters insurance covers your liability and additional living expenses id your apartment is damaged and you need to live elsewhere temporarily. Renters insurance can cover the same 16 name perils at your special and broad-form policies. Your personal property is usually covered at its replacement cost.

HO-5 Comprehensive Form

An HO5 policy is a type of premium insurance policy that provides broader protection and higher coverage limits than your typical homeowner’s policy. HO-5 policies are very similar to HO-3s, but there are some notable differences:

  • On HO-5 the dwelling and personal property are insured at their replacement cost by default. Under most HO-3s, you need to add replacement cost protection for your personal property
  • HO-5 policies provide all-risks coverage for both your home and personal belongings. HO-3s contain all-risks dwelling coverage but named perils personal property coverage.
  • HO-5 policies also include higher coverage limits for expensive types of property with normally strict coverage limits, including jewels, fine furs, and certain electronics.

HO-6 Unit-Owners Form

Known as the condo insurance, HO-6 provides personal property coverage, liability coverage, and specific coverage of improvements to the owner’s unit. Typically the owner’s condo or cooperative association provides protection that covers outside of the living space. It is important to have condo insurance since your association’s policy will not cover your personal belongings or provide you with personal liability coverage if someone gets hurt inside of your dwelling. You’ll likely need enough dwelling coverage in your condo policy to cover the cost of any condo upgrades. Your condo policy also includes personal liability, personal property, loss of use, payments for medical bills, and loss assessment coverage.

  • Your standard condo insurance policy (called an HO6 policy) provides the following 5 areas of insurance protection:
  • Dwelling including improvements, alterations, additions, etc.
  • Personal property, your personal belongings or the stuff you own
  • Loss of use providing additional living expenses when your place becomes uninhabitable
  • Personal liability also know as liability coverage when you’re sued or accidentally caused harm to others
  • Payments for others’ medical bills for covering any issues that arose at your place, or anywhere else (under $5,000)

HO-7 Mobile Home Form

Mobile home insurance is virtually an HO-3 policy but specifically designed for mobile homes. Although open-peril coverage is applied to the structure of your home and detached structures, this coverage is applied on a named-peril basis if your personal property is damaged.

The type of mobile homes that are covered under HO-7 policies includes:

  • 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

HO-8 Modified Coverage Form 

An HO-8 policy, also called the modified coverage form, is a policy for older buildings where the replacement costs possibly outweigh the market value. HO-8 homeowners’ insurance is designed for homes that don’t fulfill the insurer standards required for most types of home insurance policies.  HO8 plans may deduct depreciation when it pays out for damages. That cost is usually smaller than the replacement cost, so your insurance company pays less after a loss. Similar to HO-1 basic form policies, HO-8s are named-peril policies that only provide coverage for 10 perils, and reimbursement is assessed based on the home’s actual cash value rather than replacement cost.

Conclusion

Overall, the primary purpose of property insurance is to protect from unexpected incidents. Homeowners Insurance is designed to protect you in the event of loss or damage to your property. The second most important purpose of property insurance is to protect from liability. Standard home insurance or landlord’s insurance policy includes coverage for a variety of perils which they insure.

Ask Us Today

Most of all, with each state having its own specific regulations concerning home insurance policies and procedures, it would be sensible to check with your insurance agent in Denver, CO, or any other state. Should you have any questions, clarifications or maybe you would like a FREE insurance review of your existing policy, do not hesitate to call us toll-free at 1 (720) 221-8168 or chat with us right now. Just say hi to us in the chatbox at the lower-right corner of the screen, and we’ll be right with you shortly.