Here’s a look at the types of home insurance policies available.
- HO-1 policy
- HO-2 policy
- HO-3 policy
- HO-4 policy
- HO-5 policy
- HO-6 policy
- HO-7 policy
What Is an HO-1 Home Insurance Policy?
Also known as basic form homeowners insurance, the HO-1 provides bare-bones coverage. An HO-1 policy will pay out only if one (or more) of 10 specific perils damages your home:
- Fire or lightning
- Windstorm or hail
- Explosion
- Riot or civil commotion
- Damage caused by aircraft
- Damage caused by vehicles (such as a car that crashes into your house)
- Smoke
- Vandalism or malicious mischief
- Theft
- Volcanic eruptions
An HO-1 policy is limited because it typically covers only these 10 perils instead of the 16 or more that other policies do. It generally provides coverage only for the house structure, at actual cash value. That means you won’t get the amount you’d need to fully rebuild, but rather the value of the house minus deprecation for its age. And it generally doesn’t cover personal property, liability or additional living expenses.
The HO-1 costs less than other types of coverage because it provides the least coverage. It is not available in most states and, if you have a mortgage, you usually are required by a lender to have higher levels of protection.
What Is an HO-2 Home Insurance Policy?
Also called the broad form, the HO-2 policy provides coverage for more perils than the HO-1 policy. The HO-2 policy covers all the perils in an HO-1 policy plus:
- Weight of snow and ice
- Accidental overflow or discharge of water or steam
- Freezing of plumbing, air conditioning
- Bulging or cracking caused by a sudden and accidental event
- Falling objects
- Sudden, accidental damage caused by artificially generated electrical current
An HO-2 policy includes:
- Dwelling coverage for your house and other structures on your property
- Coverage for your personal belongings
- Personal liability
- Loss of use or additional living expenses coverage
- Medical payments to others
Also, under an HO-2 your belongings are covered for actual cash value only, which is how much the items are worth after depreciation.
What Is an HO-3 Home Insurance Policy?
The HO-3 policy provides suitable coverage for most homeowners and is the most common home insurance policy type. It covers your house and belongings and includes coverage for liability, medical payments to others and additional living expenses.
An HO-3 policy, unlike the HO-1 and HO-2, protects your house from all perils unless they are specifically listed as exclusions. This is called an “open peril” policy.
Known as a special form, an HO-3 policy will pay to repair or replace your house, up to your policy limits, as long as the damage was not due to these typical exclusions:
- Power failure
- Industrial pollution or smoke
- Earthquake
- Flooding
- Intentional damage
- War/nuclear accidents
- Pets and insects
- Settling, wear and tear
- Negligence
- Government actions and legal action due to lack of permits, faulty construction, design, or maintenance actions taken by the government and other associations
- Damage or theft in unoccupied homes or those under construction
- Deterioration due to weather conditions, that aggravate other excluded causes
For your belongings such as electronics, furniture and clothing, an HO-3 policy provides coverage for 16 perils:
- Fire or lightning
- Windstorm or hail
- Explosion
- Riot or civil commotion
- Damage caused by aircraft
- Damage caused by vehicles
- Smoke
- Vandalism or malicious mischief
- Theft
- Volcanic eruption
- Falling object
- Weight of snow, ice, and sleet
- Accidental overflow of water from household appliances or heating, plumbing, air conditioning systems or sprinkler systems that put out fires
- Freezing of household appliances or heating, plumbing, air conditioning systems or sprinkler systems that put out fires
- Accidental cracking, burning, or tearing of heating, plumbing, air conditioning systems or sprinkler systems that put out fires
- Accidental damage due to short-circuiting of an electrical current
While today’s housing market can make things challenging, the American Dream is still achievable when you follow the tips above and have a knowledgeable dedicated team at your back, helping you throughout the process.
If you’re thinking about buying a home, or in the process of purchasing a home, contact Guardian Mortgage(Opens in a new window) and our team of talented mortgage loan originators. We are here to help you find a mortgage loan option that is best for your needs while providing education and support every step of the way.