Home insurance, also known as homeowners’ insurance, is a necessity that you shouldn’t ignore to safeguard your home and possessions against theft or damage.
This insurance cover is available for homes of all sizes and shapes, whether it’s a condo, split-level ranch, or mobile home.
Hence it comes in various forms to ensure it matches your needs.
While a home insurance policy offers you protection against unexpected damage, you need to know first the different types available to know which one to choose.
To ensure you get the facts right, read this guide outlining the different types of home insurance policies this 2022. Read on for this insight.
1. HO-1 Policy
It’s the most basic form of home insurance with the most limited coverage terms.
The HO-1 policy covers your home and personal possessions at their real cash value.
There are only ten named perils that can result in an inevitable loss or danger covered by the HO-1 policy, and these include;
- Lightning or fire
- Volcanic eruption
- Civil commotion or riot
- Hail or windstorm
The HO-1 policy usually only covers these ten perils rather than 16, which other policies cover.
This policy has the least coverage because it’s cheaper than the other home insurance policy types.
However, you can’t take out this home insurance when buying a home on a mortgage because lenders typically require you to get better protection.
Some states also require you to get better homeowners insurance since HO-1 only covers the house structure at its cash value.
Therefore, your compensation in the event of damage to your home won’t be enough for rebuilding because depreciation will be considered.
This home insurance cover also doesn’t cover extra living expenses, liability, and personal property.
2. HO-2 Policy
This home insurance policy is also called broad form and offers you protection against more dangers, unlike the HO-1 policy.
It covers the dwelling, meaning your home’s structure, personal property, and replacement cost value at its real cash value.
In addition to the perils covered by the HO-1 policy, this cover also safeguards your personal belongings and home from six other damages, namely;
- Falling objects
- Accidental discharge of stream or water as well as overflow
- Accidental and abrupt damage from artificially produced electrical current such as power surges
- Sudden and unintended cracking, tearing apart, cracking, and protruding of an in-built appliance such as the heating system, centralized air conditioner, or water heater.
- Weight of sleet, snow, or ice
3. HO-3 Policy
HO-3 is the most common home insurance policy because it offers all-risks coverage.
The HO-3 policy is also known as the open peril policy as it covers your house against all dangers except those expressly stated as exclusions, such as floods and earthquakes.
Besides covering your home and its possessions, the HO-3 policy also covers medical payments for some, liability, and extra living expenses.
The HO-3 typically compensates you for damage to your home due to dangers named in HO-1 and HO-2 policies.
This policy is also referred to as a special form as it pays you to replace or repair your house up to the policy’s limits, but with a couple of exclusions, including;
- Power failure
- Settling, wear and tear
- Smoke or industrial pollution
- Pets and insects
- War or nuclear accidents
- Intentional damage
- Legal and government actions because of faulty design, construction, or lack of permits. Maintenance actions effected by the government or related bodies are also exempt.
- Deterioration because of weather conditions aggravates other omitted causes.
- Theft or damage in houses still under construction or vacant homes
As for your possessions, the HO-3 policy covers the 16 dangers or perils.
4. HO-4 Policy
This home insurance policy is known as renters insurance because it’s created for individuals renting apartments and houses.
The HO-4 policy covers both your rental property and personal property across the globe.
It also covers the 16 perils covered in the HO-2 policy and includes liability coverage and living expenses.
With that said, this policy doesn’t cover destruction to your rental unit.
You’ll need to have a landlord insurance policy for such damage to be included in your policy.
5. HO-5 Policy
The HO-5 policy is also known as the comprehensive or premier policy because it provides your house and possessions with the highest level of protection.
The only things this policy doesn’t cover are those included in exemptions, which are identical to those listed in the HO-3 policy.
However, it covers medical payments to others, liability coverage, and additional living expenses.
Some home insurance companies don’t issue this policy, and it’s often only offered to homes in low-risk neighborhoods.
But it’s an excellent choice for new construction insurance.
6. HO-6 Policy
This policy is also referred to as condo insurance or walls-in coverage and is meant for individuals living in co-op or condominiums.
How much this condo policy cost varies depending on what your condo association’s HOA insurance policy includes. Some of the things covered by this policy include;
- Walls, ceilings, and floors
- Any renovations you did on your condo after buying it
- Medical payments to others
- Extra living expenses
- Loss of use
- Loss assessment coverage
- Personal possessions
It’s advisable to carefully review your condo association’s insurance policy before getting the HO-6 policy.
7. HO-7 Policy
The HO-7 policy is designed for manufactured or mobile homes such as modular homes, RVs, sectional homes, and trailers.
It covers your personal belongings, home structure, medical payments, and extra living expenses.
This policy covers any damage to your home so long as it isn’t excluded from the list. It includes perils such as;
- Damage from cars or aircrafts
- Windstorms and hail
- Lightning and fire
It’s worth noting that this policy’s coverage isn’t active while the home is being transported.
8. HO-8 Policy
Also known as modified coverage form, the HO-8 policy is meant to safeguard older homes, typically those built over 40 years ago.
The rebuilding cost for such houses is usually more than the home’s current market value.
The HO-8 policy is designed for a home that doesn’t satisfy an insurance company’s standards.
If you have an older home, this policy is thus a great pick. However, this policy only covers ten perils, and these include;
- Lighting or fire
- Hail or windstorm
- Volcanic eruption
- Malicious mischief or vandalism
- Civil commotion or riot
Deciding which is the best home insurance policy for you can be confusing due to the many options.
But upon reading this guide, you no longer should have a similar issue as it has detailed the different kinds of home insurance policies.
Hopefully, you now know what the best home insurance policy to get.