Home insurance, also known as homeowners insurance, is a type of property insurance that covers a private residence. It provides financial protection against natural disasters, theft, and other types of damage to the home and its contents. There are several different types of home insurance policy forms available, each with its own specific coverage and exclusions. Understanding the different types of policy forms can help you choose the right coverage for your needs.
HO-1: Basic Form
The HO-1 policy form, also known as the basic form, is the most basic type of home insurance. It provides coverage for a limited number of perils (10 perils vs 16 perils covered by an HO-3), such as fire, lightning, and windstorm. It does not provide coverage for personal property or personal liability. This type of policy is generally not offered anymore and is only available in states that require a minimum level of coverage for homes. According to the NAIC (National Association of Insurance Commissioners) as of 2020 HO-1 only made up 1.72% of single-family home policies countrywide.
HO-2: Broad Form
The HO-2 policy form, also known as the broad form, provides broader coverage than the basic form. In addition to covering the perils listed in the basic form, it also covers additional perils such as theft, vandalism, and damage caused by certain natural disasters such as earthquakes and hurricanes. HO-2 policies will usually include coverage for your home at its replacement cost and personal property will be covered at its actual cash value. According to the NAIC (National Association of Insurance Commissioners) as of 2020 HO-2 makes up 6.41% of single-family home policies countrywide.
HO-3: Special Form
The HO-3 policy form, also known as the special form, is the most common type of home insurance accounting in 2020 for 78.3% of single-family home policies countrywide. It provides all-risk coverage or open-perils coverage for the home and its contents, with some exclusions. This means that it covers any damage to the home or its contents, unless it is specifically excluded in the policy. Exclusions may include damage caused by war, nuclear accidents, and certain types of water damage. They include liability coverage and loss-of-use coverage.
HO-4: Contents Broad Form
The HO-4 policy form, also known as the contents broad form or renters insurance, is designed for renters. It covers the personal property of the policyholder, but does not cover the structure of the building itself. Renters insurance helps protect a renter’s personal belongings against the 16 named perils found in the broad and special form policies
HO-5: Comprehensive Form
The HO-5 policy form, also known as the comprehensive form, is similar to the special form but provides even broader coverage. It covers all risks to the home and its contents, with very few exclusions. This type of policy is generally more expensive than other types of home insurance, but provides the most comprehensive coverage. This policy is the second most popular home insurance with 13.14% of the single-family home policies countrywide.
HO-6: Unit-owners Form
The HO-6 policy form, also known as the unit-owners form or condo insurance, is designed for owners of condominiums or co-op apartments. It covers the interior of the unit, as well as personal property and personal liability. It does not cover the exterior of the building or common areas. For that the condo association may have a separate policy called HOA insurance.
HO-7: Mobile Home Form
The HO-7 policy form, also known as the mobile home form, is basically an HO-3 policy designed for owners of mobile homes. It covers the home, its contents, and personal liability, with some exclusions. Mobile homes are typically defined as homes that are built on a chassis and designed to be transported from one location to another. They may also be referred to as manufactured homes, prefabricated homes, or trailer homes.
Mobile homes are typically covered under HO-7 policies, as long as they are used as a primary residence and are not used for business purposes. Some HO-7 policies may also cover park model homes, which are small, portable homes that are designed to be used as vacation homes or seasonal homes.
It’s important to note that HO-7 policies do not cover the land on which the mobile home is located. If you own the land your mobile home is situated on, you will need to purchase separate insurance coverage for the land.
In addition to covering the mobile home itself, HO-7 policies may also cover personal property and personal liability. However, as with any insurance policy, there may be exclusions and limits to the coverage. It’s important to carefully review the policy to understand what is and is not covered.
HO-8: Modified Coverage Form
The HO-8 policy form, also known as the modified coverage form, is designed for older homes that may not be able to be insured under a standard policy. It provides coverage for the home and its contents. Similar to HO-1, HO-8s are named peril policies that only provide coverage for 10 perils. These homes may have unique characteristics or construction materials that make them difficult to insure under a standard policy.
Modified coverage policies provide coverage for the home and its contents, with exclusions for certain types of damage. The exclusions may vary depending on the insurer and the specific policy, but they may include exclusions for damage caused by earthquakes, floods, and other natural disasters.
One of the key differences between an HO-8 policy and other types of home insurance is that it may have lower limits of coverage. This means that it may not cover the full value of the home or its contents in the event of a loss because reimbursement is determined by the home’s actual cash value rather than replacement cost.
It’s also worth noting that modified coverage policies may be more difficult to find than other types of home insurance. Some insurers may not offer this type of policy at all, or may only offer it in certain areas. If you are unable to find a modified coverage policy for your older home, you may need to consider other options, such as a standard home insurance policy with endorsements or additional coverage for specific types of risks.
What’s NOT Covered On a Standard Homeowners Insurance
Standard homeowners insurance policies generally exclude coverage for certain types of damage, such as flood and earthquake damage. They may also exclude coverage for intentional acts, such as damage caused by the policyholder or a member of their household. Additionally, standard homeowners insurance policies may not cover damage to a home that is caused by lack of maintenance or wear and tear. Some policies may also exclude coverage for certain types of personal property, such as high-value items such as jewelry or art.
It’s important to carefully review the exclusions in a home insurance policy before purchasing it. If you are concerned about coverage for a specific type of damage or loss, you may need to purchase additional coverage or endorsements which are also known as riders. It’s also a good idea to keep an inventory of your personal property, including any high-value items, to make sure you have adequate coverage for your belongings.