Find the Right Insurance Policy for Your Property
When you buy home insurance, you'll be able to choose from among several different policy types or "forms". The policy form you need depends on the structure of your property and the level of coverage needed.
Insurance types for single-family homes
The most common type of housing unit in the U.S. is the detached single-family home, which can be insured under one of five different policy forms. Keep in mind that from state to state, coverages can vary even even within the same form.
HO-1 policies offer the narrowest homeowners insurance coverage that is limited to a specific list of 11 named perils. The most common perils covered by an HO-1 form are fire and lightning, windstorms and hail, smoke and theft. explosion; riots and civil commotion; aircraft; vehicles; smoke; vandalism and malicious mischief; theft; glass that is part of the home; and volcanic eruptions. It will not cover any unnamed peril in the policy - only those explicitly listed. Occasionally, HO-1 policies will not cover personal belongings in the home. It is no longer available in most states.
HO-2 policies protect against everything covered by the HO-1, plus two extra perils: damage from falling objects and water damage from accidental overflow of plumbing, HVAC and household appliances. Like the HO-1, the HO-2 is a named peril policy and only the perils specifically listed are covered - no others. The HO-2 also covers personal property in the home.
HO-3 policies are the most common because of their broad range of coverage. Sometimes called an extended or special homeowners insurance policy form, the HO-3 covers almost any peril except those specifically excluded (such as earthquake, flood, landslide or mudslide, nuclear accident and sinkholes). However, HO-3 policies only cover personal belongings in the home against the same perils covered by an HO-2 policy form.
For example, say a fire completely destroys your home and all your belongings inside. An HO-3 homeowners insurance policy will cover the structure and your belongings up to the limits defined in the policy. On the other hand, if your home and all of your possessions are destroyed by a falling object or water damage from plumbing overflow, an HO-3 policy will only cover the structure, not your belongings.
Remember, water damage due to overflow of plumbing, heating air-conditioning and household appliances is not the same as flood damage. Flooding is defined differently than water damage due to overflow and requires flood insurance.
HO-5 policy forms are like an HO-3 in that they cover almost any peril that isn't specifically called out for exclusion. But unlike the HO-3, the HO-5 is more comprehensive and covers personal property from almost every peril, unless the item is explicitly excluded. The depth of the coverage makes this policy cost more than others.
HO-8: An HO-8 policy form is designed for older homes that have a replacement cost that exceeds the actual cash value of the home. For that reason, the HO-8 policy form is frequently used to insure registered landmarks and architecturally significant structures.
In the event of a loss in this case, the payout of the actual cash value would be much smaller than that of the replacement cost. HO-8 policies are more affordable because of that smaller payout. Usually the homes are greater than 40 years old and do not qualify for an HO-3 policy. Like the HO-1, the HO-8 only covers the 11 common perils.
Types of insurance for condos and co-ops
HO-6: HO-6 policies are designed as insurance for condo owners and co-op tenants. Every condo or co-op association has different insurance policies and levels of protection. As a condo owner or co-op tenant, you have the right to review the insurance policy the association has in place. Make sure you examine the policy before purchasing insurance for your unit – you don’t want to purchase too little coverage or have coverages that overlap.
Condo owners need an HO-6 policy to cover the parts of the building that they own — namely the walls of their unit and everything within. Sometimes a condo association is only responsible for common areas of the building, landscaping and the bare walls, floor and ceiling. An HO-6 policy is especially important in that circumstance.
Insuring a co-op is a little different. Co-op tenants do not own their unit specifically — they own a share of the whole building. Even though co-op owners are considered tenants, they need an HO-6 rather than renter’s insurance because of their ownership stake. Like condo associations, co-op associations’ coverage might be limited.
Policy forms for renters
HO-4: Commonly referred to as “renter’s insurance,” this policy form covers personal property in a rented home or apartment. The owner or landlord’s insurance minimally will cover the rental structure in the event of the 11 perils covered by a HO-1, but will not cover tenant belongings. For that reason, tenants need an HO-4 policy form to cover personal property, as well as any part of the apartment they might own. For example, if a policyholder installed new kitchen cabinets, the cabinets would be covered as their possessions.
The HO-4 policy form also provides additional living expenses, in the event the residence becomes unlivable due to a covered peril. Unlike other policy forms, HO-4 does not always include liability protection, which you can and should add to the policy for an additional cost. Liability coverage is an important part of homeowners and renter’s insurance and protects the insured from potentially catastrophic financial burdens.
Other policy forms
HOA (Homeowners Association Insurance): This insurance policy form is designed to cover the common property of complexes where one or more buildings have tenants that own their unit. Since the needs of every homeowners association are different, these policies can vary greatly. All of them typically have some combination of business property insurance coverage against perils; liability coverage for accidents, mistakes and injuries on common property; and business crime insurance in the event of vandalism, robbery or board member dishonesty.
MHP (Mobile Home Policy): MHP policy forms protect mobile homes (sometime called manufactured homes) and any structures attached to them. The policies can cover the same 11 perils as an HO-1 or as many perils as the HO-3 forms detailed above. Mobile home coverage is not in effect while the home is in transit, only when it is stationary.
Mobile home insurance and RV insurance are not the same thing. Mobile home insurance is more similar in nature to other homeowners insurance policies because mobile homes are stationary. You can declare and insure an RV as your primary residence but since you can drive and park it, RV insurance is closer in nature to auto insurance.
DF-1: If your home does not qualify for one of the homeowners insurance policy forms detailed above, you can still insure it. Some companies sell a DF-1 (sometimes called fire and extended coverage) policy form that offers very limited coverage if you or your home doesn’t qualify for others. The DF-1 policy form usually covers: fire and lightning; windstorm and hail; explosion; riot or civil commotion; aircraft; vehicles; and smoke. Check your insurer's policy, however, since only specifically named perils will get covered.