The 8 Types of Home Insurance: Which Is Best For You?

November 02, 2018

homeowner and Insurance Decision

Did you know that homeowner’s insurance comes in 8 different flavors? It’s just like a sno-cone — except not as delicious, and a lot more expensive.

When you compare home insurance, you may be focused solely on price. But it’s important to understand the type of insurance you’re looking at. If you opt for a policy that covers only the bare minimum, you might regret it when disaster strikes.

Here, we describe the typical coverage included in each type of home insurance. Coverage and cost can vary a lot, however, depending on which plan you choose. That’s why you should start by comparing home insurance quotes on Compare.com. See your personalized home insurance quotes here.

HO-1 — Basic Form Policy Homeowner’s Insurance

An HO-1 is usually the cheapest, most basic type of protection for your home. It covers your home and your stuff in case they’re damaged by certain “named perils,” such as fire, smoke, wind, hail, lightning, an explosion, vehicles, civil unrest, theft or vandalism. An HO-1 policy does not cover other common hazards.

Also, an HO-1 policy typically covers both your home and personal property for their actual cash value — not the cost to replace them. Maybe you paid $1,000 for your TV five years ago, but after it’s destroyed in a fire, your insurance company might give you $250 for it. You also don’t get any personal liability protection, which can protect you financially if someone gets hurt on your property.

An HO-1 policy might be the best home insurance for: Someone on a budget who owns their home outright and wants the cheapest possible insurance.

HO-2 — Broad Policy Form Homeowner’s Insurance

HO-2 homeowner’s insurance is similar to the basic form, except it typically covers a few extra scenarios: falling objects; the weight of ice or snow; the sudden failure or bursting of a hot water system, sprinkler system, or other named system; freezing of an appliance or system; or an electrical surge. Keep in mind it’s still a named perils policy, however. If something bad happens that’s not listed in your policy, you’re out of luck. An HO-2 policy can cover your home for its replacement cost value — in other words, the cost of actually rebuilding your house — or its actual cash value.

An HO-2 policy might be the best home insurance for: A budget-conscious homeowner who wants more protection than an HO-1 policy offers.

HO-3 — Special Form Homeowner’s Insurance

The special form insurance, despite its name, is the most common type of homeowner’s insurance. HO-3 insurance flips the script: Instead of naming the perils it does cover, this insurance names only the hazards it doesn’t cover (aka exclusions). Standard exclusions are flooding, earthquake, war, nuclear accident, landslide, mudslide, sinkhole and anything else specified in your policy.

HO-3 insurance covers your home for its replacement cost value. It covers your personal property only against certain named perils, and for its actual cash value.

An HO-3 policy might be the best home insurance for: An average homeowner who wants affordable protection for common hazards, and doesn’t own a lot of expensive things.

HO-4 — Renter’s Insurance

HO-4 insurance is really important for renters to carry, because it protects you in three important ways. One, it covers the actual cash value or replacement cost of your possessions, in case they’re destroyed or damaged by a named peril (usually the same perils named in an HO-2 policy). Two, you get personal liability coverage. And three, your renter’s insurance can pay your rent if you need to find new lodgings while your apartment’s being repaired after a covered claim. Best of all, renter’s insurance is usually cheap!

An HO-4 policy might be the best home insurance for: Anyone who’s renting a house or apartment and wants to protect their stuff.

HO-5 — Comprehensive Form/Premier Homeowner’s Insurance

“Comprehensive” means this type of insurance covers both your home and your personal property against a lot of things — but not everything! There are still coverage exclusions, such as floods and earthquakes. This policy covers your home and possessions for their replacement cost value.

An HO-5 policy might be the best homeowner’s insurance for: Someone who prizes their peace of mind and is willing to pay for comprehensive coverage.

HO-6 — Condominium Insurance

If you own a condo, you need protection for everything within your walls — including the walls themselves (and the ceiling and floor). You probably don’t need to buy insurance that covers the exterior building, because your condo association buys that policy. An HO-6 policy, designed for condo owners, covers just the interior of your condo, your possessions and your liability.

An HO-6 policy might be the best home insurance for: Anyone who owns a condominium and wants to protect it.

HO-7 — Mobile Home Insurance

Have you ever wondered why tornadoes seem to target mobile home parks? It’s not your imagination; tornadoes really are attracted to them, a team of scientists found. Tornadoes most often strike transition zones where the landscape changes abruptly, and most mobile home parks sit at the borders of cities or towns. Wherever your mobile home is located, it’s smart to buy HO-7 home insurance to protect it. Because manufactured homes depreciate over time (unlike traditionally built homes), you should look for a plan that offers replacement-value coverage in case of a total loss.

An HO-7 policy might be the best home insurance for: Owners of mobile or manufactured homes.

HO-8 — Older Home Insurance

If you own an older home, you know that they don’t make ‘em like that anymore. Details like fine woodwork, stonework, stained glass or ornate plaster give your house character — and can be expensive to repair. HO-8 insurance, designed for homes built before 1940, takes into account the higher costs of fixing damage to old houses and, if needed, bringing them up to code. An even more specialized (and expensive) type of home insurance covers historic homes (those built before 1900). These policies may include guaranteed replacement coverage with restoration, meaning the insurance company will pay to have the house repaired using period-appropriate materials and techniques.

An HO-8 policy might be the best home insurance for: People who own old homes and want to ensure that they’re repaired the correct way.

For situations that aren’t covered by one of these types of home insurance, such as floods and earthquakes, you can purchase additional insurance to protect yourself. Overwhelmed? Don’t sweat it! The best place to start shopping for affordable, high-quality home insurance is Compare.com. Start comparing and saving today!

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