Types of homeowners insurance

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There are several different types of home insurance, each designed to provide coverage for a specific situation. Some are more common than others, and each has some differences in terms of what is covered and how.

Home insurance companies code these policies using the letters HO and a number that indicates what type of home insurance policy it is. A standard home insurance policy, for instance, is an HO-3 policy.

Your home insurance agent or representative will help you to choose the type of policy that’s right for you, but it’s a good idea to understand what the policy types are when you’re shopping for coverage.

Key Takeaways

There are eight different types of home insurance denoted by insurance company HO codes.
Standard home insurance policies are HO-3 policies; HO-2 policies are less common and HO-1 policies are almost never used.
Renters insurance HO-4 policies and condo insurance HO-6 policies are more focused on personal property coverage.

What are the different types of homeowners insurance?

There are eight different codes used for home insurance policies. While there is an HO-1 policy, it’s hard to find an insurance company anywhere that still writes this type of policy.

HO-1: Basic form homeowners

HO-1 coverage is the most basic form of homeowners insurance for single-family homes. This offers the most minimal coverage using only actual cash value (ACV), which pays only the depreciated value, for your home and belongings. It also covers just ten named perils:

Aircraft
Explosions
Falling objects
Fire and lightning
Windstorm and hail
Riots and civil commotion
Smoke
Theft/burglary
Vandalism
Vehicles

This type of policy is almost never used and many insurance companies today don’t write it at all.

HO-2: Broad form homeowners

Instead of ACV, HO-2 insurance upgrades coverage to include replacement cost coverage (RVC). which covers the cost of replacing or rebuilding your dwelling at today’s prices. However, actual cash value still applies to your personal belongings.

In addition to ten perils from the HO-1 policy, there is also protection against six additional named perils:

Accidental discharge and water or steam overflow
Freezing
Sudden or accidental damages from an artificially generated electrical current
Sudden or accidental damages to built-in appliances
Volcanic eruption
Weight of ice, sleet, and snow

HO-3: Special form homeowners

This is the most common type of homeowners insurance coverage. Also known as a special form policy, an HO-3 policy provides adequate coverage for most single-family homes. The dwelling is covered at RCV and personal property at ACV, but personal property coverage can be upgraded.

An HO-3 policy is all all perils or open perils policy. That means all perils are covered unless they are specifically excluded. These are the commonly excluded perils on an HO-3 policy:

Birds, vermin, rodents, and insects
Discharge, dispersal, seepage of pollutants
Earth movement
Government action
Intentional loss
Mechanical breakdown
Mold, fungus, and wet rot
Neglect
Nuclear hazard
Ordinance or law coverage
Pets
Power failure
Smog, rust, or other corrosion
Smoke from agricultural smudging and industrial operations
Theft from a dwelling under construction
Vandalism or malicious mischief (when vacant for over 60 days)
War
Wear and tear
Flooding, sewer backup, and water seepage from the ground

However, an HO-3 policy is only all perils for the dwelling. Personal property is still covered on a named perils basis.

HO-4: Renters insurance

HO-4 coverage is renters insurance. It’s designed for renters and doesn’t cover the structure, which is covered by the landlord’s policy.

The standard HO-4 policy includes coverage for:

Personal property inside the home and anywhere else
Liability
Additional living expenses in case you have to relocate due to damages to your home temporarily

Your policy includes coverage for the same 16 named perils included in an HO-2 policy. Personal property is covered at ACV unless you choose to upgrade to RCV.

HO-5: Comprehensive form homeowners

HO-5 homeowners insurance is generally offered on high-value homes or brand-new high-end construction homes. Coverage is similar to an HO-3 policy, but there are some noticeable differences. HO-5 insurance includes:

All-perils coverage for dwelling and personal property
Replacement cost coverage for the dwelling and personal property
Higher coverage limits for expensive valuables, such as jewelry, antiques, and some electronics

Another major difference is that, if you file a claim, the insurance company must prove the the claim isn’t covered, rather than the onus being on the homeowner to prove that it is.

HO-6: Condo unit owners insurance

HO-6 condo insurance provides coverage for people who own a condominium or co-op. While the building itself is covered by your condo association’s HOA insurance policy, it doesn’t protect your personal property.

You may also need some dwelling, also called building property coverage, on your condo policy to cover any portion of the inside of the unit’s structure for which you are responsible. That includes any upgrades you make to the interior.

In addition to additional dwelling coverage, your HO-6 condo insurance policy may include:

Personal property
Loss of use
Personal liability
Medical payments
Loss assessment coverage

Personal property may be covered at ACV or RCV; read your policy carefully.

HO-7: Mobile or manufactured home

An HO-7 policy is also known as mobile or manufactured home insurance. It protects several types of properties, including:

Double-wide manufactured and mobile homes
Manufactured homes
Mobile homes
Modular homes
Park model homes
Sectional homes
Single-wide manufactured and mobile homes

These properties are designed much differently than the average single-family home and require unique coverage that may not be covered by other policies.

HO-8: Modified form homeowners

HO-8 insurance is a type of homeowners insurance designed to protect older homes or historic homesthat would not otherwise qualify for coverage. Due to the construction materials and features of these homes, they often won’t qualify for standard home insurance.

An HO-8 policy is a named perils policy that uses actual cash value for your home instead of replacement cost.

Are there additional types of home insurance?

There are some other types of home insurance that you may add to your home insurance policy. Known as endorsements, these are separate types of coverage that you can add to your basic home insurance policy.

Flood insurance: If your home is located in a flood zone, you should consider purchasing flood insurance from your insurance provider or directly from the National Flood Insurance Program.
Earthquake insurance. Home insurance doesn’t cover earthquakes, but coverage can be added as an endorsement or a separate policy.
Guaranteed/extended replacement cost: This is usually an endorsement but may be included with some policies. Guaranteed or extended replacement cost protection ensures that you get the full value of your home based on today’s prices for repair or rebuilding.
Landlord insurance: This type of policy is specific to the needs of landlords.
Ordinance or law coverage: Building laws may change over time, so ordinance coverage — also known as law coverage — covers the costs of demolition and rebuilding to bring it up to code.

Types of homeowners insurance coverage

Each home insurance policy is broken into parts. Below are the common types of coverage on a home insurance policy.

Dwelling coverage

Dwelling coverage is the portion of your home insurance policy that pays for repairing or rebuilding your home’s physical structure. It also typically includes attached structures, such as your garage or in-law apartments.

Other structures coverage

Covers damage to structures on your property that are not attached to the home, like a detached garage, shed or fence.

Personal property coverage

Personal property insurance covers your personal belongings, such as your furniture, clothing, and electronics. If these things are damaged from an eligible event, such as a fire, your personal property coverage will pay to replace them.

Liability coverage

Liability coverage protects you if someone or their property is damaged and you are at fault. If you are found liable, this insurance will help pay for associated legal and medical costs.

Additional living expenses or loss of use coverage

Additional living expenses protection, also known as loss of use coverage, kicks in when a loss on your property forces you to vacate the home. It can cover everything from your hotel stay to your gas, laundry, and meals.

Medical payments

If a guest is injured on your property, your home insurance includes a specific kind of coverage called medical payments coverage. It will help pay for associated medical and legal bills, regardless of whether you are to blame for the incident.

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Final thoughts

When shopping for homeowners insurance, it’s important to determine what kind of policy you need and how much coverage you need to protect your home. It’s a good idea to compare multiple home insurance quotes from different insurers to make sure you’re getting the best coverage at the best price.

Frequently asked questions about the types of homeowners insurance

What are the three types of coverage values for homeowners insurance?

The average home insurance policy assigns value based on three types of coverage: actual cash value, replacement value, and extended replacement value.

Actual cash value covers the price you paid for an item minus depreciation, while replacement value bases value on today’s pricing without depreciation. There is also the option of guaranteed or extended replacement value, which pays the full repair cost, regardless of policy limits.

What is the best type of home insurance?

The best type of home insurance depends on the type of home that you have. The most popular home insurance policy is an HO-3 policy. Still, other kinds of specialized insurance may work better for you, such as renters, condo, mobile, or manufactured home insurance.

Who offers the best homeowners insurance?

Based on our extensive analysis, the best home insurance companies in 2024 include Erie Insurance and Auto-Owners. However, the best home insurance company for you will depend on several factors, such as the kind of home you have, where you live, your credit score and your claims history.

Shivani Gite

Contributing Writer

Shivani Gite is a personal finance and insurance writer with a degree in journalism and mass communication. She is passionate about making insurance topics easy to understand for people and helping them make better financial decisions.