The Different Types of Homeowners Insurance (And Which You Should Get)

Is a house on your dream home list? The average American house price is about $348,000 these days. With that kind of investment, it’s a good idea to safeguard your home.

Homeowners insurance can help you rest easy. So, if you’re a first-time homeowner, buying insurance may be new to you.

There’s a wide variety of home insurance policies out there. One day you may truly need these policies, so it’s best to know the basics.

Keep reading to learn about the types of homeowners insurance available. By doing so, you should be able to pick one that is right for your needs. 

Basic Form (HO-1)

Basic Form HO-1 insurance is the most basic form of homeowners insurance and covers only the dwelling itself. It does not cover any contents or any other structures on the property.

It is the least expensive of all the home insurance forms, but it also provides the least coverage. If you have a mortgage, your lender will require you to have at least this level of coverage.

An HO-1 policy is a very basic type of homeowners insurance policy. It covers only six types of perils. These are fires, lightning, windstorms, smoke, theft, and explosions.

That means it does not cover any damages caused by water, weather, or vandalism. It also does not cover any of your personal belongings, unless they are damaged in a covered peril. While an HO-1 policy is the least expensive type of homeowners insurance, it also offers the least coverage.

Broad Form (HO-2)

HO-2 insurance is a type of insurance that protects your home against a wide range of perils. These include fire, wind damage, theft, and more.

It typically covers the structure of your home as well as your personal belongings. It can provide financial protection if you need to rebuild or replace your home.

There are a few disadvantages of HO-2 insurance. One is that this type of insurance only covers the dwelling. This does not include other structures on the property like a detached garage.

Another disadvantage is that this insurance has limited coverage of perils or risks. Some of the excluded perils are war, nuclear accidents, and intentional damage. This means that if your home gets damaged by one of these excluded perils, you will not get compensated by your insurance company.

Special Form (HO-3) 

HO-3 Insurance is a type of insurance that covers the home and its contents. It is one of the most types of homeowners insurance policies and is often required by lenders.

It covers the home itself, as well as the contents of the home, such as furniture, appliances, and clothing. It may also cover personal belongings. Examples are jewelry, electronics, and art.

This type of insurance does not cover the land on which the home sits. But, it may cover detached structures, such as sheds or garages.

Contents Broad Form (HO-4)

The HO-4 policy is a renters insurance policy that covers your personal belongings in the event of a covered disaster, such as a fire. It also covers you if someone is injured while in your home. While your landlord’s insurance covers the building itself, an HO-4 policy protects your belongings and can give you peace of mind.

There are a few events excluded from the HO-4 policy. These events are catastrophic, and as such, most policies exclude them.

The most common exclusion is for damage caused by flooding, as this is not covered by standard insurance policies. Other exclusions can include damage caused by earthquakes, landslides, sinkholes, and even war.

Comprehensive Form (HO-5) 

The HO5 policy is one of the most comprehensive types of homeowners insurance coverage available. It covers both the dwelling and the contents of the home.

It protects against a wide variety of risks. This coverage includes fire, theft, and vandalism. The HO-5 policy also covers liability for injuries sustained by guests on the property.

Several exclusions are specific to the HO-5 policy. These exclusions include loss or damage caused by flood, earthquake, nuclear accident, war, malicious acts, and government action.

Also, the HO-5 policy excludes loss or damage to property that is left unattended for more than 60 days. It also excludes loss or damage caused by insects or vermin.

Unit-owners Form (HO-6) 

The HO-6 policy is a type of insurance policy that covers a homeowner’s unit in a condominium or townhouse. The HO-6 policy is also known as a unit-owners policy.

This policy provides coverage for the unit owner’s personal belongings. It also provides coverage if someone gets injured while on the premises. 

There are a few exclusions to an HO-6 policy that are important to be aware of. These exclusions include damage caused by flooding, short-circuiting, neglect, and intentional damage.

Also, an HO-6 policy will not cover any damage to the unit that is beyond the walls of the unit. One example is damage to the common areas of a condominium complex or the grounds of a homeowners association. 

Mobile Home Form (HO-7)

The HO-7 policy covers structures considered to be mobile homes. This type of policy is usually only available to those who own manufactured homes.

It is important to note that not all insurers offer this type of coverage. In most cases, this policy will offer narrower coverage than a standard homeowners policy. But it can get tailored to meet the specific needs of the insured.

Modified Coverage Form (HO-8) 

The HO-8 policy is a type of homeowners insurance policy designed to cover older homes. The policy covers actual cash value, rather than replacement cost. This means that if your home suffers any damage, you will only get paid based on the current value of the home.

The HO-8 policy has limited replacement cost coverage. This means that if your home gets damaged beyond repair, the insurance company will only pay up to the limit of the policy. This is instead of paying the full replacement cost.

The policy also has a higher deductible than a standard homeowner’s policy. This means that you will have to pay more out of pocket before you can make a claim.

Choosing Between the Types of Homeowners Insurance

There are many types of homeowners insurance to choose from and it can be difficult to determine which one is right for you. The best way to decide is to speak with a professional who can help you assess your needs and find the best policy for you. Also, be sure to read the fine print and understand the coverage before you commit to a policy.

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