Owning a home is a major milestone—and a major investment. Protecting that investment starts with choosing the right insurance policies. But if you’re like many homeowners, understanding the different types of coverage available can feel overwhelming. Each policy offers a unique level of protection, and selecting the wrong one could leave you vulnerable when you need coverage the most.
In this guide, we’ll break down the major types of home insurance policies, what they cover, and how to determine which one is right for you.
1. HO-1: Basic Form Policy
This is the most limited form of home insurance. An HO-1 policy typically covers only a short list of “named perils”—things like fire, theft, vandalism, and lightning. It does not include personal liability protection or coverage for personal belongings in most cases.
Because of its limited scope, HO-1 is rarely offered today, but it can still be useful for certain property types or investment homes.
2. HO-2: Broad Form Policy
A step up from the HO-1, this policy protects against more perils. It still only covers specifically listed events, but the list is longer and may include things like accidental water damage, falling objects, or snow/ice damage.
It's suitable for homeowners looking for a middle-ground option with a balance of affordability and protection.
3. HO-3: Special Form Policy (Most Popular)
This is the most commonly purchased home insurance policy. It provides "open peril" coverage for the structure of your home—meaning unless something is specifically excluded, it’s likely covered. Your personal belongings, however, are still covered only against named perils.
Most homeowner insurance providers recommend this type of policy because it offers a good mix of comprehensive coverage and peace of mind.
4. HO-4: Renter’s Insurance
While not technically a homeowner's policy, it’s worth mentioning. HO-4 policies are designed for renters and cover personal property, liability, and additional living expenses (ALE) if your rental becomes uninhabitable due to a covered event.
If you're a landlord, it's worth discussing what insurance policies your tenants should carry under an HO-4 plan while you ensure your own property is protected.
5. HO-5: Comprehensive Form Policy
This premium policy offers the most robust protection for both your home and your personal belongings. Unlike HO-3, HO-5 also covers your possessions on an “open peril” basis. It's ideal for high-value homes or homeowners who want maximum protection with fewer exclusions.
6. HO-6: Condo Insurance
Condo owners require a specialized policy. HO-6 covers interior structures, personal property, and liability. It also typically includes loss assessment coverage, which helps if you're responsible for a shared loss in a common area.
If you're in a condo community, check with your HOA to see what’s covered under their master policy before choosing your own.
7. HO-7 and HO-8: For Mobile and Older Homes
HO-7 is tailored for mobile or manufactured homes and mirrors the protections of HO-3 but adapted for mobility and structure differences.
HO-8, on the other hand, is ideal for older or historic homes, where replacement cost exceeds market value. It often insures the property for its actual cash value, making it more affordable for unique dwellings.
Why Liability Coverage Matters
All home insurance policies typically include personal liability coverage, which protects you financially if someone is injured on your property or if you accidentally damage someone else's. However, for broader liability concerns—such as business-related risks—you may want to explore general liability insurance, especially if you run a business from home or rent out part of your property.
How to Choose the Right Coverage
Selecting the right policy depends on several factors:
Type of residence: Condo, single-family home, mobile home, or rental.
Value of personal property: Consider how much it would cost to replace everything.
Location risks: Are you in an earthquake or flood zone?
Budget and risk tolerance: Higher premiums often mean fewer out-of-pocket costs later.
If you’re unsure where to start, explore reputable providers like homeowners insurance services that offer multiple coverage types under one roof and can guide you through the best options for your home.
