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Before you can buy the right home insurance coverage for your home, you must first understand what you are buying. With eight different types of home insurance, it can be a little confusing to determine the best form of coverage for you and your family. But don’t worry, we’re here to make it easy.

There are eight types of homeowners insurance:

HO-1 – named-peril, actual cash value homeowners insurance for single-family homes
HO-2 – named-peril, replacement cost homeowners insurance for single-family homes
HO-3 – most common, all perils not listed homeowners insurance that covers replacement cost
HO-4 – renters insurance
HO-5 – all peril, replacement cost homeowners insurance for single-family homes
HO-6 – unit or condo insurance
HO-7 – mobile or manufactured homeowners insurance
HO-8 – older home insurance

Before you purchase your next homeowners insurance policy, this is what you need to know for your single-family home, apartment, condo or rental property.

HO-1

HO-1 coverage is the most basic form of homeowners insurance for single-family homes. This offers the most minimal amount of coverage using only actual cash value (ACV) for your 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

Due to the exclusions and limited coverage of this policy, it is rarely chosen by homeowners and is challenging to find among insurance companies.

HO-2

Instead of ACV, HO-2 insurance upgrades coverage to include replacement cost for your dwelling. There is still actual cash value for your personal belongings, however.

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

Accidental discharge or overflow of water or steam
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

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.

It also approaches named perils differently. Instead of listing the perils included in your policy, an HO-3 policy lists the perils that are not included. 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 to a dwelling under construction
Vandalism or malicious mischief (when vacant for over 60 days)
War
Wear and tear
Water damage, including flooding, sewer backup, and water seepage from the ground

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HO-4

HO-4 coverage is a form of renters insurance. It is a good fit for those who rent their homes, apartments, or condos.

The standard HO-4 policy includes coverage for:

Personal property inside the home and anywhere else
Liability
Additional living expenses in case damages to your home force you to live somewhere else

Your policy includes coverage for the same 16 named perils that are included in an HO-2 policy. Your personal property coverage is also provided with replacement cost value.

HO-5

Also known as comprehensive homeowners insurance, this is the second most common form of insurance. Coverage is pretty similar to an HO-3 policy, but there are some noticeable differences. It includes:

All-risks coverage for dwelling and personal property
Higher coverage limits for expensive valuables, such as jewelry, antiques, and some electronics

With your policy, both your dwelling and personal property are protected with replacement cost instead of ACV. It is also an excellent fit for high-value properties.

HO-6

Unit-owners form insurance, better known as HO-6 condo insurance, provides coverage for those properties located in a condominium or co-op. While the building itself is often covered by your condo association’s HOA insurance policy, it often does not protect your personal property.

If you make any renovations, you should ensure that you have enough dwelling coverage in your HO-6 policy to cover your new home improvements.

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

HO-7

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

Double-wide manufactured and mobile homes
Manufactured homes
Mobile homes
Modular homes
Park model homes and RVs
Sectional homes
Single-wide manufactured and mobile homes
Trailers, including travel trailers and fifth-wheel trailers

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

HO-8

HO-8 insurance is a kind of non-standard homeowners insurance. It is designed to protect older homes that would not otherwise qualify for coverage. A crumbling roof or outdated wiring can quickly disqualify your home for standard coverage, but HO-8 insurance could help. It protects just ten named perils with 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.
Guaranteed/extended replacement cost: Many types of insurance include only ACV, which covers the cost that you paid for your home and not what it is worth now with inflation. 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: Some providers like Geico offer full landlord insurance protection for property owners who rent their properties.
Ordinance or law coverage: Building laws may change over time, so ordinance coverage (also known as law coverage) will help cover the costs of demolition and rebuilding to bring it up to code.
Pet insurance: Pets are family, too, but the average insurance policy does not protect them unless you add pet insurance as additional coverage.

Types of homeowners insurance coverage

No matter what kind of policy you choose, some standard types of coverage make up basic home insurance. When you buy a home insurance policy, you are also buying dwelling, personal property, liability, additional living expenses, and medical payments coverage. This is why each protection is a critical part of your overall insurance coverage.

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.

Personal property coverage

Personal property insurance covers your personal belongings within the home, 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 while on your property. This insurance will help pay for associated legal and medical costs if you are found liable.

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 at blame for the incident.

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.

ACV 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 cost of repair, 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 2021 include State Farm, American Family, Travelers, Farmers, Nationwide, and USAA.

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.

Lena Borrelli

Contributing Researcher

Lena Borrelli is a freelance writer from sunny Tampa Bay who has worked with such leading industry titans as Gronk Fitness, Morgan Stanley, Wells Fargo and Simon Corporation. Her work has most recently been published on sites like TIME, Microsoft News, Bankrate, Investopedia, Fiscal Tiger, The Simple Dollar, ADT and Home Advisor.