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What are six home insurance policy forms and their coverages

Homeowners insurance is one of the most important purchases you can make to protect your home (and, by extension, your family) from unexpected expenses that you would otherwise have to cover yourself.

If you’re in the market for homeowners insurance, you probably have a lot of questions. how much coverage do you need? how much will the coverage cost? What factors influence your deductible? Are there improvements, improvements or changes to the home that could lower your premium?

Reading: What are six home insurance policy forms and their coverages

These are all good questions to ask. Another important question to ask yourself is: what type of homeowners insurance policy do I need?

Below, we review the main types of homeowners insurance policies you can find and explain the key differences between them. We also offer guidance to help you determine what type of policy you’ll need.

types of homeowners insurance

There are eight different types of “standard” homeowners insurance policies you may find when shopping for insurance. they are numbered 1 through 8, and each offers different types and levels of protection. these are:

  1. ho-1: basic form
  2. ho-2: broad form
  3. ho-3: special form
  4. ho-4: content in broad form
  5. ho-5: full form
  6. ho-6: unit owners form
  7. ho-7: mobile home form
  8. ho-8: modified coverage form
  9. Of these, the most common policy types that most homeowners carry will be ho-3 or ho-5.

    Homeowners insurance terms you should know:

    • designated peril: refers to damage or loss caused by an event that is specifically mentioned in the policy.
      • Replacement Cost: This is the amount of money it would take to replace something, like your home or personal belongings.
        • Actual Cash Value: This is the value of something when factors like depreciation have been taken into account. it is usually lower than the replacement cost.
        • 1. ho-1: basic form

          what it is: ho-1 insurance, also known as basic homeowners insurance, is truly the most basic form of homeowners insurance there is. If you have an HO-1 policy, your home will typically be covered at its actual cash value. personal belongings may be covered by ho-1 policies, but this is not always the case.

          What it covers: Ho-1 policies generally provide coverage only for damage or loss caused by 10 specifically named perils:

          • fire or lightning
          • wind storm or hail
          • explosion
          • riot or civil commotion
          • planes
          • vehicles
          • smoke
          • vandalism and mischief
          • theft
          • volcanic eruptions
          • damage or loss caused by events not specifically listed are not covered.

            Who it’s for: Because these policies provide very little coverage and don’t cover some fairly common events (such as damage from falling objects or the weight of snow or ice on a roof), many insurance carriers no longer offer these policies. ho-1 insurance is not recommended for most people.

            2. ho-2: broad form

            what it is: ho-2 insurance is also known broadly as homeowners insurance because it provides coverage for a broader range of risks than a ho-1 policy. HO-2 policies will generally cover your home at its replacement cost. personal property will be covered at its actual cash value.

            what it covers: an ho-2 policy will typically cover everything a ho-1 policy covers, plus additional coverage for perils such as damage caused by:

            • the weight of ice or snow on a structure
            • the overflow or accidental discharge of water or steam
            • freezing
            • cracks or bulges caused by a sudden and accidental event
            • accidental discharge of an artificially generated electrical current (i.e. a power surge)
            • falling objects
            • individual ho-2 policies may provide additional specific peril coverage, depending on the company.

              Who is it for: Although ho-2 policies are more common than ho-1, they are still less common than ho-3 and ho-5. that’s because of the limited coverage they offer.

              3. ho-3: special form

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              what it is: ho-3 coverage is the most common type of homeowners insurance. also known as special formulary coverage. Under HO-3 insurance, your home will generally be covered at its replacement cost, while your personal property will be covered up to its actual cash value. In most cases, an endorsement can be added to your policy to provide replacement coverage for your personal property for an additional cost.

              what it covers: compared to ho-1 and ho-2 policies, ho-3 provides coverage against a much broader number of risks. This is because while ho-1 and ho-2 policies only provide coverage against certain named perils, a ho-3 policy will provide coverage for your home against damage caused by any peril except for those specifically excluded in the policy.

              some perils commonly excluded from a ho-3 policy include:

              • earthquake
              • flood
              • landslide/mudslide
              • nuclear accident
              • sink
              • carelessness
              • act of war or government action
              • among others
              • ho-3 policies generally only cover personal property against the perils listed in the policy, which generally corresponds to the named perils found in a ho-2 policy.

                Who it’s for: This type of policy will be a good option for most homeowners. No wonder it’s the most common homeowner’s insurance policy!

                4. ho-4: broad form content

                what it is: ho-4 is better known as rental insurance. As such, HO-4 policies are designed specifically for those who rent or lease an apartment, house, or condominium.

                What it covers: Renter’s insurance essentially covers the renter’s personal property (at its replacement cost) against the same perils listed as found in a ho-3 policy. Renters insurance also typically covers your living expenses if your rented home becomes uninhabitable due to damage from a specific hazard, such as a fire, and you need to find a new place to stay.

                an ho-4 policy may or may not provide liability coverage.

                Who it’s for: If you’re renting an apartment, condo or house, this is the policy for you!

                5. ho-5: comprehensive form

                what it is: ho-5 insurance, or a comprehensive policy, is often considered to offer the highest level of coverage for single-family homes. It’s similar in many ways to a ho-3 policy, but with added protection and a few key differences.

                what is covered: under an ho-3, only your home is insured at its replacement cost, while your personal belongings will be covered at their actual cash value. an ho-5 covers both your home and personal belongings at their replacement cost (which is usually higher than cash value).

                Also, while an HO-3 limits personal belongings coverage to just the named perils, with an HO-5 your personal belongings will be covered for all of the same perils as your home. Finally, an HO-5 policy will typically come with higher coverage limits for certain types of personal property, such as art, jewelry, and electronics.

                Who it’s for: Because of the higher coverage limits offered by a ho-5 policy, this is a good option if you have a lot of high-value personal property in your home or if you just want as much coverage as possible. After ho-3, ho-5 is the second most common type of homeowners insurance policy.

                6. ho-6: unit owners form

                what it is:an ho-6, also known as condo insurance or unit owner insurance, is a special type of policy designed for those who live in a cooperative or condominium.

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                What it covers: In most cases, the condo association will have hoa insurance, which will generally cover the condo building itself and certain shared areas. While each HOA policy will vary in exactly how much (and what) it covers, you, as the unit owner, will need to purchase coverage for anything the HOA doesn’t insure. this will often include coverage for:

                • Any renovations, upgrades, or upgrades made to the unit after you purchased it
                • the walls, floor and ceiling of the unit
                • personal property
                • loss of use
                • personal responsibility
                • and more
                • Because hoa policies can vary significantly, it’s crucial that you understand exactly what the master policy covers so you can purchase the right coverage for your own unit.

                  who it’s for: if you own a condo or cooperative unit, you most likely need ho-6 coverage. if you rent one of these units, you will need renters insurance (ho-4).

                  7. ho-7: mobile home form

                  what it is: a ho-7 is designed to provide essentially the same coverage as a ho-3 policy, but for a mobile home. This is because mobile homes are not covered by a HO-3 policy, which is designed for single-family homes. these policies are also known as mobile home policies (mhp).

                  what is covered: ho-7 policies can provide coverage for a variety of structures, including:

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