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Insurance

Types of Homeowners Insurance

Homeowners insurance is essential for protecting your house. But if you’re shopping for new coverage, you’re probably already aware of the many options available. These options can make finding a suitable policy for your new home overwhelming. 

To help simplify the process of getting the best policy, we’ve outlined the different coverage types and how they work. Here’s what to know. 

In this guide:

The 8 types of homeowners insurance

There are eight types of homeowners policies, plus additional terms and details related to coverage. Here’s a brief look at coverage types, which we’ll discuss in more detail shortly. 

  • HO-1: Basic form—A bare-bones policy that only covers your home’s structure against named perils like fire, wind, and smoke damage. 
  • HO-2: Broad form—These provide slightly more coverage than HO-1s, protecting your home’s structure and personal belongings. Certain HO-2s may also include liability coverage. 
  • HO-3: Special form—The most common homeowners policy, protecting your home’s structure, personal belongings, loss of use, liability, and medical payments coverage.
  • HO-4: Contents broad form—Commonly called renters insurance, it protects a renter’s personal belongings, loss of use, and liability coverage.
  • HO-5: Comprehensive form—Coverage beyond what a typical HO-3 provides, generally including protection for several high-value belongings and standard coverage options.
  • HO-6: Unit-owners form—Commonly called condo insurance, it protects an owner’s personal belongings, liability coverage, loss of use, and basic dwelling coverage.
  • HO-7: Mobile home form—Provides structural, liability, loss of use, and medical payments coverage for mobile or manufactured homes. 
  • HO-8: Modified coverage form—Structural, personal belongings, loss of use, liability, and medical payments coverage for unique or difficult and expensive-to-replace homes. 
What is a peril?

A peril is a specific even that causes damage or loss.

Named peril vs. open peril policies

In addition to the policy types listed above, your homeowners coverage may be a named peril or open peril policy. 

  • Named peril policies only cover you for the events listed in your policy, such as fire, lightning strikes, and other common perils. If the peril isn’t named in your policy, it’s likely excluded from your coverage. 
  • Open peril policies cover most perils unless a specific event is called out as an exclusion in your policy. 

Understanding the difference between named and open peril policies can help you choose the best option. Keep in mind that not all insurers offer the same coverage types. So if you’d prefer open peril vs. named peril coverage, be sure to ask what your insurer offers. 

Types of homeowners insurance coverage

Several common types of coverage, including dwelling, personal property, liability, loss of use, and medical payments, are included in many popular homeowners insurance policies. Here’s a look at common coverage types and the protection they offer. 

  • Dwelling: Financial protection for your home’s structure after a covered event. 
  • Other structures: Coverage for other structures like your shed or standalone garage.
  • Personal property: Insures your personal belongings if they’re damaged due to a covered peril. 
  • Liability coverage: Financial protection if you’re sued and found at fault for someone else’s injury in your home. 
  • Loss of use/living expenses: Pays for your living expenses if your home becomes temporarily uninhabitable due to a covered peril. 
  • Medical payments: A small amount of financial protection if someone else is injured in your home, no matter who’s at fault.

Additional coverage for events such as earthquakes and floods may also be available, though these coverages are typically separate from standard homeowners policies. 

Depending on where you live, flood or earthquake coverage may be very expensive. Weigh the pros and cons when considering these coverage types. 

Levels of homeowners insurance coverage

In addition to coverage types, there are also different levels of homeowners insurance coverage. Here’s what to know. 

  • Replacement cost: Coverage level that replaces damaged structural materials with similar materials, not factoring in depreciation. 
  • Actual cash value: Coverage level that replaces damaged personal items with similar items, factoring in any depreciation.
  • Extended cost: Coverage level above your policy limit to account for sudden increases in costs, such as higher costs of construction materials. 

Replacement cost and actual cash value coverage levels come standard with many homeowners policies. Typically, homeowners pay more for extended cost coverage, as this coverage exceeds policy limits. 

The different types of homeowners insurance explained

Of the eight types of homeowners insurance policies, each is unique in whether it’s a named peril or open peril policy and the type of coverage it provides. The table below provides a quick comparison among policies. Click the policy name to navigate below for more details.

PolicyHO-1 HO-2 HO-3 HO-4 HO-5 HO-6 HO-7 HO-8 
TypeBasicBroadSpecialContents broadComprehensiveUnit ownersMobile homeModified coverage
Open or named peril?NamedNamedBothNamedOpenNamedNamedNamed
Dwelling
Other structure
Personal property
Liability
Loss of use
Medical payments

HO-1: Basic form

HO-1s provide very basic, limited homeowners insurance coverage. Typically, these policies only cover your home’s structure and other structures, like garages or sheds, against limited named perils. 

If you’re financing your home, an HO-1 might not provide sufficient coverage, as many lenders require a more comprehensive policy.

What’s covered?

Damage to your home or other owned structures due to covered perils like:

  • Fire
  • Lightning
  • Explosions
  • Riots
  • Damage caused by vehicles and planes
  • Smoke damage
  • Vandalism and theft
  • Volcanic eruption

Who it’s best for:

Because this policy provides such limited coverage, a more comprehensive policy is often a better choice.

HO-2: Broad form

HO-2s provide slightly more coverage than HO-1s, covering personal items in addition to dwellings and other structures. Liability insurance is sometimes—but not always—included with HO-2s. Check with your insurer about liability coverage if you’re considering this type of policy.

What’s covered?

Damage to your home, other owned structures, and personal belongings due to named perils, including:

  • Fire
  • Lightning
  • Explosions
  • Riots
  • Damage caused by vehicles and planes
  • Smoke damage
  • Vandalism and theft
  • Volcanic eruption
  • Falling object
  • Weight of ice or snow
  • Damage due to accidental home system malfunction
  • Frozen pipes

Who it’s best for:

Homeowners who are comfortable with risk and seeking basic, affordable coverage.

HO-3: Special form

An HO-3 is the most common type of homeowners policy because it offers considerable protection against several common risks. Dwelling, other structures, personal property, liability, loss of use, and medical payments coverage typically come standard with HO-3 policies. 

These policies can be open peril or named peril, but certain exclusions typically apply.

What’s covered?

Coverage against perils like:

  • Fire
  • Lightning
  • Explosions
  • Riots
  • Damage caused by vehicles and planes
  • Smoke damage
  • Vandalism and theft
  • Volcanic eruption
  • Falling object
  • Weight of ice or snow
  • Damage due to accidental home system malfunction
  • Frozen pipes

Common exclusions may include: 

  • Floods
  • Earthquakes
  • Sewer backup
  • Termites
  • Mold
  • Lack of maintenance
  • War
  • Nuclear event
  • Mudslide or landslide
  • Sinkhole

Who it’s best for:

Risk-conscious homeowners seeking a standard policy. 

HO-4: Contents broad form

If you’re renting a home, you may want to consider an HO-4, or renters insurance, policy. Renters insurance policies often aren’t required by law, but your landlord may require them. 

This type of coverage typically protects your personal belongings from covered events and may include liability, loss of use, and medical payments coverage too. It doesn’t cover damage to your dwelling or other structures, as building owners typically hold those policies.

What’s covered?

HO-4s cover personal property damage due to covered perils like:

  • Fire
  • Lightning
  • Explosions
  • Riots
  • Damage caused by vehicles and planes
  • Smoke damage
  • Vandalism and theft
  • Volcanic eruption
  • Falling object
  • Weight of ice or snow
  • Damage due to accidental home system malfunction
  • Frozen pipes

Who it’s best for:

Risk-conscious renters who want to protect their belongings and finances.

HO-5: Comprehensive form

Similar to HO-3s, HO-5s include dwelling, other structures, personal property, liability, loss of use, and medical payments coverage.

The difference is that HO-5s may provide higher coverage limits than HO-3s. This can be useful if you have many valuable items, such as jewelry or artwork, in your home.

It may be more difficult to find an HO-5 policy, as not all insurers offer them. This coverage is also typically more expensive.

What’s covered?

HO-5s typically provide open peril coverage, meaning you’ll be covered against anything not specifically called out as an exclusion in your policy. 

Common exclusions may include damage due to: 

  • Floods
  • Earthquakes
  • Sewer backup
  • Termites
  • Mold
  • Lack of maintenance
  • War
  • Nuclear event
  • Mudslide or landslide
  • Sinkhole

Who it’s best for:

Homeowners with several high-value items seeking coverage beyond a standard HO-3.

HO-6: Unit-owners form

HO-6 coverage was designed for condominium owners. It typically includes personal property, liability, loss of use, and medical payments coverage. 

Some dwelling coverage for materials inside your unit may also be included, though building owners typically have broader dwelling coverage to protect the building’s structure. 

What’s covered?

HO-6s are typically named peril policies that may cover damage due to things like:

  • Fire
  • Lightning
  • Explosions
  • Riots
  • Damage caused by vehicles and planes
  • Smoke damage
  • Vandalism and theft
  • Volcanic eruption
  • Falling object
  • Weight of ice or snow
  • Damage due to accidental home system malfunction
  • Frozen pipes

Who it’s best for:

Risk-conscious condo owners seeking standard homeowners protection.

HO-7: Mobile home form

HO-7s offer dwelling, other structures, personal property, liability, loss of use, and medical payments coverage for owners of mobile or manufactured homes that aren’t eligible for a standard homeowners policy. This type of coverage is typically named peril coverage, meaning you’ll only be covered against events listed in your policy. 

What’s covered?

Covered events may vary by insurer and policy, but they could include:

  • Fire
  • Lightning
  • Explosions
  • Riots
  • Damage caused by vehicles and planes
  • Smoke damage
  • Vandalism and theft
  • Volcanic eruption
  • Falling object
  • Weight of ice or snow
  • Damage due to accidental home system malfunction
  • Frozen pipe

Who it’s best for:

Owners of mobile or manufactured homes who are seeking financial protection. 

HO-8: Modified coverage form

HO-8 coverage protects historic homes or homes with unique, expensive-to-replace architectural features. Often, these homes may cost significantly more to repair than standard, newer homes because the building methods and materials are older or uncommon.

This modified policy provides dwelling, other structures, personal property, liability, loss of use, and medical payments coverage. 

What’s covered?

HO-8s are typically named peril policies, not open peril as you might see with an HO-3 or HO-5. Perils typically covered include:

  • Fire
  • Lightning
  • Explosions
  • Riots
  • Damage caused by vehicles and planes
  • Smoke damage
  • Vandalism and theft
  • Volcanic eruption

Who it’s best for:

Homeowners who live in historical homes or unique properties. 

Are there other types of homeowners insurance?

Besides the policies listed above, additional homeowners insurance coverage may be available. Depending on the insurer, some coverage types may even fall under a standard or comprehensive policy.

  • DP3: DP3s are open peril policies that provide coverage for rental or second homes. Dwelling coverage is typically included, and liability, medical payments, or loss of use coverage are optional. 
  • Personal umbrella: A personal umbrella policy provides extra liability coverage beyond a standard homeowners policy. 
  • Scheduled personal property: Often sold as an add-on to a standard policy, personal property insurance can protect high-value items in your home.
  • Short-term rental insurance: If you rent a room or space in your primary residence, you may also want short-term rental insurance coverage. This coverage offers liability, dwelling, and personal property protection.
  • Vacant insurance: Homes are often considered vacant if left unoccupied for a month or two, and many standard policies don’t cover unoccupied properties. Specialized vacant insurance coverage can protect your home against fire, vandalism, or theft.

How do I choose the type of insurance I need?

While standard HO-3 policies are popular among homeowners, everyone’s needs are slightly different when it comes to homeowners insurance. 

It’s best to speak with a licensed independent insurance agent about your situation. Doing so can help guide you on which homeowners coverage is best for you. 

For instance, if you own several valuable items, an HO-3 may not provide sufficient coverage, and an HO-5 may be a better alternative. 

How much does homeowners insurance cost?

Generally, the fewer perils your homeowners insurance covers or the lower your coverage limits, the less expensive your policy will be. For example, HO-1s offer limited coverage, but their premiums are also typically lower than HO-3 premiums. 

The cost of your insurance coverage varies based on several factors, including your location, insurance company, coverage type, and more. But according to a 2022 study, the average annual cost of homeowners insurance is $1,899

Comparison shopping can help you determine if your coverage is priced fairly or if you’re overpaying for a homeowners policy.

Tips for buying homeowners insurance

As with any other insurance type, it’s wise to compare homeowners insurance providers and coverage to find the best possible option. A licensed independent insurance agent can also help simplify the comparison process. 

Look at available coverage, coverage limits and levels, and monthly premium costs. Pay attention to terms like named vs. open peril, especially if you’d prefer one coverage type over the other, before making your choice.