Homeowners require different levels of insurance based on the type of home they own. Often, lenders will not finance an uninsured property and may even require a specific type of insurance. In the event of a loss, you need to be sure you have the right coverage. In this blog, we’ll break down the eight different types of home insurance.
HO-1: Basic Form
Best for: The most basic coverage.
In an HO-1 policy, only items explicitly listed in the policy are covered. Most commonly, those items are:
- Fire and smoke damage
- Windstorms and hailstorms
Not many homeowners have HO-1 policies. HO-1 policies exists mostly for homeowners who can’t get another type of coverage.
Florida is an area with a history of major hurricane losses. For this reason, most HO-1 policies in Florida do not include windstorm or hurricane coverage. Homeowners must purchase that separately.
HO-2: Broad Form
Best for: Homeowners that can’t obtain an HO-3 policy.
HO-2 policies offer a bit more coverage than HO-1 policies, but not as much coverage as an HO-3 policy. They are a good middle ground if you cannot afford an HO-3 or if your property is ineligible for one. In addition to the named items in an HO-1 policy, an HO-2 typically includes:
- Falling objects
- Sudden or accidental water discharge
- Frozen pipes
- Sleet, ice or snow damage caused by weight
HO-3: Special Form
Best for: Most Homeowners
HO-3 policies are most popular with homeowners because they provide fairly comprehensive coverage without a skyrocketed monthly rate. HO-3 policies are considered open-peril, meaning any damage will be covered unless it is specifically excluded. In general, exclusions include:
- Earthquake damage
- Flood damage
- Vermin and Termites
- Wear and tear
Personal property is still covered as named-perils, rather than open-perils.
HO-4: Contents Broad Form
Best for: Renters
Whether you rent an apartment, condominium or house, you are not responsible for the structure you live in. That is the responsibility of your landlord, who likely already has an insurance policy.
As a renter, you are only responsible for your own personal belongings and liability. HO-4 policies cover the same named perils in an HO-3, but are usually much cheaper because they do not include the structure.
HO-4 policies also include liability insurance, which will protect you if someone is hurt in your home and files a law suit.
HO-5: Comprehensive Form
Best for: Maximum Coverage
HO-5 policies provide both the structure of your home and personal property with open-peril coverage. This provides far more protection because you will be protected from any loss or damage that isn’t specifically excluded in your agreement.
HO-6: Unit-owners Form
Best for: Condominiums and co-ops
Your HOA already has insurance for the exterior of your building and any common areas you share with neighbors. However, the insurance provided by your HOA does not usually cover any improvements to your unit, your personal property or liability.
When purchasing an HO-6 policy, contact your HOA and ask for a copy of their insurance policy. Understand exactly what it covers and work with your insurance agent to craft a policy that does not overlap with your HOA’s coverage.
Consider getting special assessment coverage. This will allow you to use your insurance to pay for an assessment if you need one.
HO-7: Mobile Home Form
Best for: Mobile homes
This coverage is comparable to an HO-3 but it is designed for mobile homes. Most policies do not cover your home while in transit, but you can purchase extra coverage if you anticipate moving around.
HO-8: Modified Coverage Form
Best for: Old homes
HO-8 are some of the least popular insurance policies.
These policies are designed to cover homes that would cost more to rebuild than they are worth. This could be because the home is made with rare or antique materials or because the neighborhood is is in is no longer popular.
HO-8 policies offer similar coverage as HO-1 policies. Often, they are the homeowners’ only option.
How Do I Know What My Policy Covers?
One of our attorneys can help you review your insurance policy and understand what is covered. If your insurance company has denied or delayed your claim, we can help. Book a free consultation today—we’ll work with you to ensure you get the funds you deserve.