Types of Homeowners Insurance (Policy Forms)

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There are several policy types, or "forms," of homeowners insurance to pick from. The policy form you need depends on the structure of your property and the level of coverage.

Insurance types for single-family homes

The most common type of housing in the US is a detached single-family home, which can be insured under one of five policy forms. Keep in mind that from state to state, coverages can vary, even within the same form.

HO-1 policies offer the narrowest homeowners insurance coverage. An HO-1 is limited to a list of 11 specific perils (hazards). The most common perils covered by an HO-1 are fire and lightning, windstorms and hail, explosions, riots and civil commotion, aircraft, vehicles, smoke, vandalism and malicious mischief, theft and volcanic eruptions. It does not cover any unnamed perils. And sometimes personal belongings in the home aren't covered. HO-1 policies are no longer available in most states.

HO-2 policies protect against everything the HO-1 does, plus two extra perils. Damage from falling objects is covered, as is water damage from an accidental overflow of plumbing; heating, ventilation and air conditioning (HVAC); or household appliances. Like the HO-1, the HO-2 covers only the perils specifically named — 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. They're sometimes called an extended or special homeowners insurance policy form. The HO-3 covers almost any peril, except ones that are specifically excluded (such as earthquakes, floods, landslides or mudslides, nuclear accidents and sinkholes).

However, HO-3 policies only cover personal belongings in the home that are damaged by a peril listed in the policy.

For example, say a fire completely destroys your home and all of your belongings. An HO-3 will cover the structure and your belongings, up to the limits spelled out in the policy. On the other hand, if your home and possessions are destroyed by a falling object or water damage from a plumbing overflow, an HO-3 policy might only cover the structure, not your belongings. It depends on the named perils in your policy.

Remember, water damage due to overflow of plumbing, HVAC or household appliances is not the same as flood damage. Flooding is defined differently and requires flood insurance.

HO-5 policy forms are like an HO-3 but more comprehensive. . HO-3 policies only cover a specific list of perils. But the HO-5 covers personal property for almost every peril, unless the item is explicitly excluded. The extra coverage also makes this policy more expensive.

HO-8: An HO-8 policy is designed for older homes that have a replacement cost that's higher than the actual cash value. For that reason, the HO-8 is often used to insure registered landmarks and architecturally significant buildings.

In the event of a loss in this case, the payout of the actual cash value would be much smaller than the replacement cost. HO-8 policies are more affordable because of that smaller payout. This is usually for homes over 40 years old that do not qualify for an HO-3 policy. Like an 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 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 in place. Make sure you read the policy before buying insurance for your unit, so you don't get too little or have coverages that overlap.

Condo owners need an HO-6 policy to cover the parts of the building they own. This includes the walls of the 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 situation.

Insuring a co-op is a little different. Co-op tenants do not own their unit but a share of the whole building. Even though co-op owners are considered tenants, they need an HO-6, rather than renters insurance, because of their ownership stake. Like condo associations, co-op associations may have limited coverage.

Policy forms for renters

HO-4: Commonly referred to as renters insurance, this policy form covers personal property in a rented house or apartment. The landlord's insurance minimally covers the structure for the 11 perils covered by an HO-1. But it does not cover tenant belongings. So tenants need an HO-4 policy to cover personal property and any part of the apartment they own. For example, new kitchen cabinets installed by a renters would be a covered possession.

The HO-4 also covers additional living expenses if the residence becomes unlivable due to a covered peril. Unlike other policy forms, an HO-4 does not always include liability protection, which you can and should add for an additional cost. Liability coverage is an important part of homeowners and renters insurance and protects you from potential financial disaster.

Other policy forms

Homeowners association (HOA) insurance: This policy is designed to cover the common property of complexes where at least one building has tenants who 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 for perils; liability coverage for accidents, mistakes and injuries on common property; and business crime insurance in case of vandalism, robbery or board member dishonesty.

Mobile home policy (MHP): MHP forms protect mobile homes (sometimes called manufactured homes or trailers) and any structures attached to them. The policies can cover the same 11 perils as an HO-1 or as many perils as an HO-3. Mobile home coverage is only for when the home is stationary, not while it's in transit.

Mobile home insurance and RV insurance are not the same thing. Mobile home insurance is more similar to other types of homeowners insurance, because mobile homes are stationary. You can declare and insure an RV as your primary residence, but because you can drive and park it, RV insurance more so resembles auto insurance.

DF-1: If your home does not qualify for one of the insurance policies detailed above, you can still insure it. Some companies sell a DF-1 (sometimes called fire and extended coverage) form that offers very limited coverage if your home doesn't qualify for other policies. The DF-1 usually covers fire and lightning; windstorms and hail; explosions; riots or civil commotion; aircraft; vehicles; and smoke. Check your company's policy, though, because only specifically named perils are covered.

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