What Are the Common Types of Homeowners Insurance?

March 4, 2022
|In Education
|By McMahon Insurance

Did you know that 95% of homeowners in the U.S. have home insurance? These people understand that insuring a home isn’t a luxury but a necessity.

If you’re serious about protecting your home, you should also take out a homeowners insurance policy. Home insurance will be a way of protecting yourself from financial losses in case unexpected events damage your property.

You’re probably asking yourself: what type of homeowners insurance do I need? Here, we’ll answer your question by walking you through the common types of homeowners insurance.

HO-1: Basic Form

Just like the name states, this is the most basic homeowners insurance. It will only cover your home and attached personal items at their actual cash value.

HO-1 insurance protects your home in ten specific perils. These include:

  • Explosion
  • Fire or lightning
  • Windstorm or hail
  • Vehicles
  • Smoke
  • Aircraft
  • Theft
  • Vandalism
  • Riots
  • Volcanic eruptions

You won’t be compensated if anything damaged your home not listed above. Given the limitations, HO-1 is not a common homeowners insurance option, and we wouldn’t recommend it for you. Most insurance companies have stopped offering this type of insurance.

HO-2: Broad Form

This type of homeowners insurance covers broader perils than the HO-1 policy. The insurance will cover your home at its replacement value. It will also cover your personal property at its actual cash value.

HO-2 will cover all the perils listed in the HO-1 policy, plus a few others. These include:

  • The weight of snow on your home
  • Accidental water overflow or discharge
  • Freezing
  • Falling objects
  • Accidental damage by electric currents
  • Accidental burning and cracking of household items

HO-3: Special Form

This is the most popular insurance for homeowners. It will cover your home, personal property, and liabilities related to your home. HO-3 will provide coverage for your home and property against all risks, including those in the broad form policy.

The policy also covers medical payments and living expenses in the event of an undesirable event. HO-3 can take care of additional perils like pet damage and defective construction.

However, the homeowners insurance type excludes some perils. Examples of the perils not covered include:

  • Flood
  • Earthquake
  • Sinkholes
  • Landslide
  • War
  • Neglect
  • Nuclear accident

The exclusions mean that when you have HO-3 insurance, you will still need to have other insurance policies like flood insurance. Most people still prefer HO-3 because it offers open-peril coverage that will protect your home against all risks, unless there are exceptions.

HO-4: Contents Broad Form

If you’re a renter interested in buying homeowners insurance, this will be your best option. HO-4 is designed for those renting or leasing a dwelling. The insurance will cover your personal property against most of the perils in HO-3.

HO-4 will also give you additional coverage, such as liability coverage. Technically, HO-4 is not a “homeowners” policy because you don’t own the apartment you’re renting. Therefore the policy does not cover the building structure.

HO-5: Comprehensive Form

HO-5 is the highest standard of home insurance coverage. If you’re looking for the most comprehensive homeowners insurance policy, HO-5 should be at the top of your list.

The insurance will cover your home, liability, additional living expenses, belongings, and medical payments incurred by others. If you want to protect your gold and diamonds, HO-5 is the right homeowners insurance for you.

Although HO-5 is an open perils policy, it has exclusions. Examples of the exclusions include:

  • Mold
  • Infestation of insects, rodents, or birds
  • Nuclear hazard
  • Earth movement
  • Government action
  • Mechanical breakdown

Given that HO-5 is an open peril, it will make it easier for you to file a claim. You won’t have to prove that a covered peril damaged your home.

HO-6: Unit-owners Form

If you’re a condo owner, HO-6 is the right insurance for you. The insurance policy will cover everything in your unit. It will also cover additional living expenses, personal liability, and medical payments.

Since you’ll only own a unit, a condo association will cover the entire condo building and shared areas through HOA insurance. As a condo owner, you’ll help pay for the association’s insurance through HOA fees.

The coverage you’ll need in the HO-6 policy will depend on what the HOA insurance policy covers. This means you will need insurance for anything not covered under the HOA. It could be renovations and upgrades to the entire unit, or maintenance for areas like the floors and walls.

HO-7: Mobile Home Form

This type of insurance provides the same coverage as HO-3, but it is meant for mobile homeowners. The policy will cover your belongings, home structure, medical payments, additional living expenses, and liability.

HO-7 will cover your mobile home’s exterior under an open perils policy. It will protect your home against all damage, even if it is not specified in the insurance policy. HO-7 will cover a variety of mobile home structures, including:

  • Trailers
  • Sectional homes
  • Modular homes
  • Park model homes
  • Single- and double-wide mobile homes
  • Single- and double-wide manufactured homes

You should talk to your insurance company to determine whether it covers the mobile home while in transit or while stationary.

HO-8: Modified Coverage Form

A modified coverage form is suitable if you have an older home that would be difficult to replace in the event of damage. For example, your home could have a unique architectural design or be built from materials that are uncommon today. It could also be a historic landmark.

You should get HO-8 insurance coverage if your home meets these criteria. The policy will cover you even if the cost of repairing the home is higher than its current value.

HO-8 will cover your home, personal liability, medical payments, and extra living expenses. However, you’ll only get coverage for named perils. These include riots, damage from automobiles, fire, hail, theft, smoke, and vandalism.

Find a Provider With the Best Types of Homeowners Insurance

Insuring your home is a vital decision that can protect you from financial loss in the event of catastrophic events. Now that you understand the types of homeowners insurance, the next step is to find a reliable insurer with the best deals.

Don’t wait until unexpected events damage your home. Contact our agents at McMahon Insurance Agency to understand the homeowners insurance options that suit you. We’ll help you find the best policy at the most affordable insurance rates.