The Different Types of Homeowners Insurance That Exists Today

Did you know that the majority (if not all) of mortgage lenders will have home insurance as a required part of your loan terms?

You may have come across terminology like “HO-6,” “HO-3,” or “HO-4” in your insurance policy that you’ve never heard of before. Perhaps your insurance agent overheard you state that you had HO-3 form homeowners insurance. If you’re not sure what these phrases signify, don’t worry.

There are many different types of homeowners insurance policies available to you on the market. Keep on reading to learn everything you need to know as a first time home buyer about what the insurance industry has to offer when it comes to home insurance. 

The Most Common of All Types of Homeowners Insurance: HO–1

It’s the most basic sort of homeowners insurance coverage available. Only your home’s structure, connected buildings like garages, appliances, and in-home items like carpets are covered by this policy.

Personal property, liabilities, and extra living costs are not covered. Due to its drawbacks, it is not a standard option for homeowners insurance.

It is a named perils policy, which means it only protects your property in particular circumstances, such as:

• Explosions
• Damage from aircrafts or vehicles
• Riots
• Hail and windstorms
• Fire and lightning
• Theft
• Vandalism
• Smoke
• Volcanic eruption

You can consider this policy as the most bare-boned of the bunch. It’s practically only there in the name. Therefore, you’ll want to look into more protective policies. 

HO–2

A wide sort of insurance, an HO-2 policy protects your house and personal property. Your personal goods, whether they are at your house, vehicle, or someplace else, will be covered by most insurance carriers.

In rare cases, you may include liability coverage in HO-2 insurance. Contact your insurance company to determine whether your HO-2 policy provides liability coverage. Your house and personal belongings are protected against the same risks as those covered by an HO-1 policy under HO-2 coverage.

Also, you’ll want to get a homeowners insurance quote before making a final decision. 

HO-3

Your house, personal property, liabilities, extra living costs, and medical payments are all covered by the HO-3 Special Form homeowners insurance plan.

An HO-3 is considered typical coverage. It provides ‘open perils’ coverage for the structure of your house, which protects you against any calamities unless specifically excluded by the policy. If a catastrophe is specifically mentioned in the insurance, your policy will cover your personal belongings against ‘designated hazards.’

The Common Renter’s Insurance: HO–4

Residents who wish to protect their personal possessions and their responsibility and extra living costs may do so with an HO-4 policy, more commonly known as renters insurance.

Because renters don’t own their houses, an HO-4 is not “homeowners” insurance; hence, this policy type excludes coverage for the building’s structure.

HO–5

For those who want the best house insurance, HO-5 coverage is the best option.

Your property, personal items, an obligation to others, and extra living costs are all covered by this sort of home insurance, the most comprehensive choice available. It’s also worth noting that many insurances have more significant limits available for valuables like jewelry.

We recommend the HO-5 homeowner’s insurance policy for those who possess valuable objects, such as jewelry or antiques. According to her, the extra expense and lack of availability of this coverage may not be worth it if you have a lot of expensive belongings.

If you have an open perils insurance with HO-5 coverage, You will protect your house and personal belongings against everything not expressly excluded in your policy. A few examples of frequent exceptions are:

• Intentional loss
• Government actions or laws
• Earth movement
• Mechanical breakdown
• Infestation of birds, rodents, or insects

Because it is unnecessary to establish that a covered hazard caused the damage to submit a claim under an HO-5 policy, which professionals designed on an open perils basis rather than a named perils basis, the policy covers more conditions.

HO–6

Condominium owners may get specialized HO-6 insurance. Including personal responsibility and extra living costs, it covers everything in your apartment.

Condo plans often contain housing coverage since condo owners may be liable for the inner walls of their apartments. A condominium association’s insurance coverage typically covers the building’s common spaces, grounds, and outside components rather than the whole structure.

Condo or HOA fees are a common way for condo owners to contribute to the cost of the association’s insurance.

HO–7

Trailers, modular houses, and modular homes are covered under an HO-7 policy. This sort of insurance covers personal goods, liabilities, extra living costs, and medical payments.

Any circumstance that you haven’t clearly listed in your insurance policy can be covered by an open perils policy, which protects the outside of your house. HO-7 plans, on the other hand, provide named hazards coverage for your personal items. That implies that just a limited set of circumstances protect your personal belongings.

HO–8

If you have an older house or one challenging to replace, the HO-8 policy is the best option for homeowners.

Historic residences, architecturally notable homes, and homes constructed using materials and techniques that aren’t widespread today are all included in this category. HO-8 insurance may be a viable alternative if the cost of repairing your damaged house exceeds its current market worth.

Personal property, liabilities, supplementary living costs, and medical payments are all included in HO-8 insurance. A named perils insurance covers the structure of your house and your personal belongings.

Comprehensive Insurance: The Homeowner’s Edition

If you’re taking out a mortgage to buy a house, your lender may stipulate that you carry homeowners insurance. You may not need homeowners insurance if you’ve already paid off your mortgage or acquired your home without one, but it might save you money in the case of a complete or severe covered loss.

We hope that our breakdown of the types of homeowners insurance has cleared up some of the nuances of these policies. And, if you’re interested in learning more, you should check out our insurance section.