Types of Home Insurance Policies

Home Insurance Policy Types:

This is where a home insurance policy depends on the type of dwelling you are in and whether or not you own the contents. It’s also where it gets complicated. Home insurance companies tend to group the types of coverage into a number of standard policy types, based on the types of ‘perils’ covered and the type of dwelling. These home insurance policy identifiers are known across the industry and may be referred to by your agent or broker:

HO-1: Limited coverage policy which covers you against only certain perils. Generally, the home insurance policy only covers a limited number of disasters over the course of the policy. It’s not advisable to get this kind of policy, even if it’s available to you. Note that this kind of home insurance policy has been phased out in many parts of the US.

HO-2: A basic policy provides protection against all 16 disasters and the coverage levels will be more generous. You can obtain a version of this policy designed for a mobile home.

HO-3: The most popular policy that will cover all perils on the buildings themselves, but generally only specified perils on your contents. You are covered for all perils unless specifically noted by the home insurance policy. The excluded perils will usually include floods, earthquakes, wars and nuclear accidents (which are all special perils requiring separate endorsements – and more money in premiums).

HO-4: Created specifically for those who rent. This home insurance policy covers the contents for renters without covering the building itself or structure of the unit. It will have limited liability coverage included.

HO-6: A policy for those who own a condominium or co-op and it provides coverage for your belongings and the structural parts of the building that you own. The home insurance policy will also include liability.

HO-8: Policies designed for older homes. The insurer reimburses you for damage on an actual cash value basis. In plain terms, this means replacement cost less depreciation. Since you will not be paid full replacement cost it will mean money out of your pocket if you want to build or repair your home to its ‘original’ state. However, full replacement cost home insurance policies may be difficult or impossible to get for some older homes.

This is a detailed list that specifies the perils that are covered under the different policy types: