what are the different types of homeowners insurance

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

Full Answer

What are the different types of homeowners insurance policies?

What are the different homeowners insurance coverage types?

• Actual cash value. Actual cash value coverage means that in the event of a covered loss, the insurance company will pay the policyholder what the home or personal property is ...
• Replacement cost. ...
• Guaranteed or extended replacement cost. ...

How to find the best homeowners insurance?

• Ensure your coverage type and limits are of equal footing across the insurers whose quotes you're comparing.
• Avoid the impulse to choose the lowest premium if the policy does not completely cover you.
• Update your coverage and shop insurance companies annually to get the best value at the lowest rate.

What are the different types of homeowners policies?

Your Complete Guide to the Different Types of Homeowners Insurance Policies

• Versatile: HO-3. We figured it’s best to start with the most common form of homeowners insurance. ...
• Simple: HO-1. ...
• Broader: HO-2. ...
• Comprehensive: HO-5. ...
• Renter’s Insurance: HO-4. ...
• Condo Insurance: HO-6. ...
• Older Home: HO-8. ...
• Mobile Home: HO-7. ...
• Optional Insurance. ...
• Types of Homeowners Insurance: The Bottom Line. ...

What is the best homeowners coverage?

• Best for cheap rates: Acuity
• Best for first-time homebuyers: Allstate
• Best for customer satisfaction: Amica
• Best for easy claims filing: State Farm
• Best for bundling home and auto: Encompass
• Best for comprehensive coverage: Safeco
• Best for techies: Hippo
• Best for green homes: Travelers
• Best for military families: USAA

What are the 3 basic levels of coverage that exist for homeowners insurance?

Homeowners insurance policies generally cover destruction and damage to a residence's interior and exterior, the loss or theft of possessions, and personal liability for harm to others. Three basic levels of coverage exist: actual cash value, replacement cost, and extended replacement cost/value.

What are the 6 categories covered by homeowners insurance?

Generally, a homeowners insurance policy includes at least six different coverage parts. The names of the parts may vary by insurance company, but they typically are referred to as Dwelling, Other Structures, Personal Property, Loss of Use, Personal Liability and Medical Payments coverages.

What are the 4 major categories of coverage in homeowners insurance?

In short, homeowners insurance helps protect you, your home and your belongings from a variety of unexpected events. A standard policy includes four key types of coverage: dwelling, other structures, personal property and liability.

What are the 8 different types of homeowners insurance?

Types of Homeowners InsuranceHO-1: Basic Form.HO-2: Broad Form.HO-3: Special Form.HO-4: Contents Broad Form.HO-5: Comprehensive Form.HO-6: Unit-owners Form.HO-7: Mobile Home Form.HO-8: Modified Coverage Form.

What is the most important home insurance coverage?

An HO-5 insurance policy provides the most extensive homeowners coverage. It pays for damage to your home and belongings from all causes except those the policy excludes by name. It's typically available only for well-maintained homes in low-risk areas, and not all insurers offer it.

What is never included in homeowners insurance?

Standard homeowners insurance policies typically do not include coverage for valuable jewelry, artwork, other collectibles, identity theft protection, or damage caused by an earthquake or a flood.

Does homeowner insurance cover roof leaks?

Yes, homeowners insurance covers roof leaks if they occur accidentally and suddenly by a covered peril like a storm with high winds or hail. Slow leaks, or leaks caused by a lack of maintenance, are not typically covered by home insurance.

What should you insure your home for?

Your home insurance policy should provide cover for your home contents and your building (if you own the home). You'll usually be protected against: Fire damage: Cover for the cost of fire damage to both the structure of your property and the belongings you have.

What is the first step to consider when buying homeowners insurance?

The first step in selecting a homeowners policy is figuring out how much insurance you actually need. There are several individual costs you'll need to break down to get an accurate estimate. The most important figure to consider is how much money it would take to rebuild your home if it was completely destroyed.

What is the most common type of homeowners insurance policy sold?

The HO-3, also known as a "special form," is the most common homeowners insurance policy form, says the National Association of Insurance Commissioners. An HO-3 offers "open peril" coverage for the structure of your home.

What does HO6 mean?

An HO6 insurance policy is homeowners insurance for those who own a condominium or co-op unit. As a condo or co-op unit owner, you own and are likely responsible for damages to your unit.

What is HO3 vs HO6 insurance?

HO-3 and HO-6 insurance cater to different home owners. HO-3 insurance is designed for standalone homes, and HO-6 insurance is used to cover condos. There are some similarities—they both cover personal property, liability, medical payments and loss of use coverage.

What is the difference between HO5 and HO6?

For HO3 policies, it's common to see open perils coverage for your home itself and named perils for your personal property. HO5 policies feature open perils coverage for both. If you're a condo owner with an HO6 policy, you're covered for everything inside the walls of your place for named perils.

Which of the following would be covered by a home insurance policy quizlet?

Most home insurance policies include coverage against fire, theft, and other hazards for your home and other structures, and personal property. In addition, policies cover additional living expenses, personal liability, medical payments, and supplemental coverage for minor property damage mishaps.

Does homeowner insurance cover roof leaks?

Yes, homeowners insurance covers roof leaks if they occur accidentally and suddenly by a covered peril like a storm with high winds or hail. Slow leaks, or leaks caused by a lack of maintenance, are not typically covered by home insurance.

What is covered by specific type of insurance policy?

What Does Specific Insurance Mean? Specific insurance is a type of property insurance in which only one individual property is covered by the policy. Specific insurance is an alternative to blanket coverage, in which a policy can cover many different properties or locations.

What is homeowners extended coverage?

Homeowners insurance extended coverage gives homeowners an extra cushion if the cost of rebuilding their home exceeds the limits listed on their po...

How much coverage do I need for homeowners insurance?

That's an individual question and depends on your home's materials and building costs in your area. For a rough estimate, multiply your home's squa...

What is the 80% rule in insurance?

The 80% rule says an insurer will only pay for the full replacement cost of a home if the homeowner has purchased coverage equal to 80% or more of...

What is not covered by most homeowners insurance?

You won't find coverage for earthquakes, floods, sewer backup, or damages caused by a failure to maintain the property with any of the types of hom...

What is the main coverage in any homeowners policy?

A standard homeowners policy offers four main protections. It covers the home, other structures on the property, and personal belongings. It also i...

What is the most common type of homeowners insurance?

You will find the HO-3 or the special form policy to be the most common type of homeowners insurance. It is most used because it has large range of coverage and some of the most affordable premiums. It covers all of the perils mentioned in the HO-1 and HO-2 policies and then goes even further.

What is HO1 home insurance?

HO1: Basic Form. Your basic form home insurance policy is super simple , it will only cover what is outlined in your policy. These types of policies are known as "named peril" policies which simply mean that if the type of peril isn't named, it isn't covered. Unfortunately this policy only covers 10 perils which are:

How long does it take to get home insurance?

You can get home insurance coverage within minutes of getting your quotes and applying.

What does "cover what it would cost to replace the item" mean?

This means that the policy will cover what it would cost to actually replace the item, not the current value of the item.

What does a broad form cover?

The broad form policy will usually cover the structure and your personal property.

Is homeowners insurance for a tiny home?

Hopefully you can see that homeowners insurance is for your house, apartment, condo, mobile home, tiny home (yes it's a thing), historical homes and landmarks. It's even for the apartment you’re renting and even property you’re renting to someone else.

Does riot insurance cover personal property?

While this may seem like a reasonable amount of things to cover, the policy is much more limited in the fact that it also doesn't cover personal property or personal liability coverage. Luckily for us, most states and insurance companies don't offer this type of policy anymore.

What is the basis for all homeowners insurance policies?

A standard homeowners insurance policy includes the following coverages: Dwelling coverage is the basis for all homeowners insurance policies.

What is home insurance?

A standard homeowners insurance policy includes the following coverages: 1 Dwelling coverage is the basis for all homeowners insurance policies. It provides protection for the structure of your home including the floors, walls, built-in appliances and ceilings, as well as any attached structures. It also covers a variety of perils including fire, hail, theft and vandalism – and can help you rebuild your home in the event of a total loss (up to your policy limit). 2 Contents coverage protects items including furniture and clothing in your home. If a covered incident were to occur, you would receive funds for the value of these items, as defined by your policy. Personal liability pays for damages that occur from certain accidents. 3 Personal liability consists of bodily injury damage coverage, which covers costs if a guest sustains an injury in your home or elsewhere, and property damage coverage, which kicks in if your property is damaged as a result of a covered accident.

What is brand new belongings?

Brand New Belongings® is an optional, add-on endorsement that can provide funds to repair or replace certain belongings in the aftermath of a covered loss, without a deduction for deterioration and depreciation .

What insurance kicks in when you rebuild your house?

Ordinance or law insurance kicks in if you need to rebuild your house to fit current building codes after a covered loss. It can be a smart choice if you have an older home.

What is contents coverage?

Contents coverage protects items including furniture and clothing in your home. If a covered incident were to occur, you would receive funds for the value of these items, as defined by your policy. Personal liability pays for damages that occur from certain accidents.

What is medical insurance?

Medical payments coverage may provide payment for a medical expense resulting from an accident on the customer’s property. This coverage is intended for the immediate medical treatment of guests on the customers’ premises, without determining fault.

What does a home insurance policy cover?

It provides protection for the structure of your home including the floors, walls, built-in appliances and ceilings, as well as any attached structures. It also covers a variety of perils including fire, hail, theft and vandalism – and can help you rebuild your home in the event of a total loss (up to your policy limit).

What are the different homeowners insurance coverage types?

In addition to the types of property insurance listed above, home insurance can also be broken down this way:

Why is home insurance important?

Home insurance is essential for people who want to protect their home and personal property. But with so many types of homeowners insurance policies available, it can be challenging to know what kind of coverage is needed. Below, we'll look at the most common homeowners insurance coverage types to help you find what you need.

What does HO 6 cover?

These policies also include loss assessment coverage. This helps cover shared losses to common spaces in the homeowners association.

What is the 80% rule for home insurance?

The 80% rule says an insurer will only pay for the full replacement cost of a home if the homeowner has purchased coverage equal to 80% or more of the home's value. If the homeowner doesn't have at least this much coverage, the insurer will only pay for a portion of the rebuilding costs.

What is HO-1 insurance?

HO-1. An HO-1 policy is the most basic of all the types of homeowners insurance for single-family homes. It only covers homes and personal belongings at actual cash value against the following perils: Damage from aircraft. Damage from vehicles. Explosions. Falling objects. Fire or lightning. Hail or windstorms.

How to estimate how much home insurance to rebuild?

Or, for a quick estimate, multiply the square footage of your home by the per-square-foot building costs in your area.

What are the 10 perils of a home?

Both are protected against the 10 perils listed above as well as: Accidental discharge or overflow of water or stream. Freezing. Sudden and accidental damage from an artificially generated electrical current.

How many types of home insurance are there?

There are eight types of home insurance. They are classified as HO-1 through HO-8. Each category is designed for a different type of home with its own coverages.

What is the cheapest home insurance?

Your cost for homeowners insurance may vary depending on where you live, how old you are, the value of your home and your credit score, if allowed as a rating factor in your state. Still, you can try to find the providers with the cheapest home insurance for your situation.

How much should I be paying for homeowners insurance?

Homeowners insurance costs vary significantly between people. However, the average cost of home insurance in the United States is $1,312 per year for $250,000 in dwelling coverage. You should get an idea of how much homeowners insurance costs in your area by doing research and getting several quotes.

What is HO-1 insurance?

An HO-1 policy is the most basic of all the types of homeowners insurance policies. It only provides coverage for the structure of your home, attached structures like garages, and appliances and home features like carpeting. It does not include coverage for personal property, liability or additional living expenses. Because of those limitations, it is not a popular choice for home insurance.

Does Bankrate include insurance?

While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Buying a house is a big investment. To protect your new home, it is important to get homeowners insurance.

Does home insurance cover personal property?

It only provides coverage for the structure of your home, attached structures like garages, and appliances and home features like carpeting. It does not include coverage for personal property, liability or additional living expenses. Because of those limitations, it is not a popular choice for home insurance.

Is homeowners insurance required?

If you are purchasing a home with a mortgage, your financial institution may require you to have an active homeowners insurance policy. But even if you have already paid off the loan — or purchased your home without one — having a homeowners insurance policy could help you to save compared to paying the full cost of repairs out-of-pocket in the event of a total or major covered loss.

What Are the Different Types of Homeowners Insurance?

Within the U.S., there are 8 main home insurance policy types, also referred to as insurance forms.

What is the purpose of the above-given summary of the different types of homeowners insurance policies?

The above-given summary of the different types of homeowners insurance policies covers most residence types and is meant to give you a basic understanding of the subject. The specific details and combinations, though, always depend on the particular home insurance company.

Why is it important to know the basics of home insurance?

Knowing the basics of home insurance coverage is essential in mitigating your future risks and liabilities and making an informed decision on purchasing the best homeowners insurance possible.

What percentage of home insurance is covered by a disaster?

Usually, the amount is between 50-70% of the coverage for home structure.

What does the resale insurance cover?

It covers the repairs and replacement costs of your property at its original purchase value regardless of how much the said property has been appreciated or depreciated since then.

What is HO 4 insurance?

More commonly known as renters insurance, HO-4 is a policy specifically meant for those leasing rather than owning a residential property.

Is HO 8 coverage limited?

Because of the higher associated risks of an old home, HO-8 insurance coverage offered by most companies tends to be limited, eligible for only a few perils.

How many types of homeowners insurance are there?

There are eight different types of “standard” homeowners insurance policies that you might encounter as you shop for insurance. They are numbered 1-8, and each offers different types and levels of protection. These are:

What type of insurance do most homeowners have?

Of these, the most common types of policies held by most homeowners will either be HO-3 or HO-5.

Why is it important to understand the HOA policy?

Because HOA policies can vary so significantly, it’s crucial that you understand exactly what is covered by the master policy so that you can purchase adequate coverage for your own unit.

Why is HO-1 insurance not recommended?

Who it’s for: Because these policies provide so little coverage and do not cover some rather common events (such as damage caused by falling objects or the weight of snow or ice on a roof) many insurance carriers no longer offer these policies. HO-1 insurance isn’t recommended for most people.

What is home insurance?

Homeowners insurance is one of the most important purchases that you can make to protect your home — and by extension, your family — from unexpected expenses that you would otherwise need to cover yourself.

Is a HO-5 a good insurance?

That being said, for most homeowners, an HO-3 or HO-5 should provide adequate coverage. Most renters, meanwhile, should be well-covered by an HO-4. If you own a condo or co-op then an HO-6 will likely make the most sense for you, while an HO-7 provides coverage for mobile homes. Older homes that do not qualify for coverage under an HO-3 or HO-5, such as historical landmarks, may need to purchase coverage under an HO-8 policy.

Is HO-5 a good policy?

Who it’s for: Because of the higher coverage limits offered by an HO-5 policy, this is a good choice if you have a lot of high-value personal property in your home, or if you simply want as much coverage as possible. After HO-3, HO-5 is the second most common type of homeowners insurance policy.

What Are the Different Types of Homeowners Insurance Policies?

There are eight different homeowners insurance policy types – or forms – and for good reason. The insurance needs of a single-family home are much different than the needs of a condo or rental unit. Policy forms help tailor coverage to fit those homes.

What is the most popular homeowners policy?

The HO3 policy is the most popular homeowners policy because it’s a good balance between robust coverage and affordable premiums. In fact, 79 percent of homeowners policies issued are HO3 policies , according to 2017 data from the National Association of Insurance Commissioners.

Why is HO1 policy rarely used?

In today’s world, the HO1 policy is rarely used because its coverage is so limited, It only covers damage to your home from 10 named perils and insures your home at its actual cash value. That means your home is only covered for its depreciated value, not what it would actually cost to rebuild it today.

What is HO3 insurance?

HO3 Policy – Special Coverage: This is the most common type of homeowners insurance. It offers replacement cost coverage for the home and covers all perils except those the policy names as exclusions.

What is HO4 policy?

HO4 Policy – Contents Broad Coverage for Renters: This provides coverage for a renter’s belongings, personal liability, and loss of use.

What does a renters policy cover?

Most renters policies cover your belongings anywhere in the world. It also offers personal liability, loss of use, and medical payments coverage.

How much does it cost to rebuild a house?

For example, it may cost $120,000 to rebuild your home given today’s cost of labor and materials. But if your home’s actual cash value is only $90,000, you’d need to come up with the $30,000 difference to rebuild.

Named Peril vs. Open Peril Policies

To better understand how the different types of home insurance work, it’s important to know how they’re set up. A “peril” is an incident or problem that causes damage to your home, yourself or your belongings. Generally, there are two ways coverage is explained in a policy—open peril and named peril:

What Is an HO-1 Home Insurance Policy?

Also known as basic form homeowners insurance, the HO-1 provides bare-bones coverage. An HO-1 policy will pay out only if one (or more) of 10 specific perils damages your home:

What Is an HO-2 Home Insurance Policy?

Also called the broad form, the HO-2 policy provides coverage for more perils than the HO-1 policy. The HO-2 policy covers all the perils in an HO-1 policy plus:

What Is an HO-3 Home Insurance Policy?

The HO-3 policy provides suitable coverage for most homeowners and is the most common home insurance policy type. It covers your house and belongings and includes coverage for liability, medical payments to others and additional living expenses.

What Is an HO-4 Renters Insurance Policy?

Known as renters insurance, the HO-4 policy is for people renting houses and apartments. Belongings are covered for the same 16 perils listed in the HO-3 policy. Additional living expenses and liability coverage are also included.

What Is an HO-5 Home Insurance Policy?

Called a comprehensive policy, an HO-5 policy offers the highest level of insurance coverage for houses and belongings. It covers your house and belongings under all circumstances except those listed as exclusions in the policy. The exclusions for HO-5 policies are the same as those under an HO-3.

What Is an HO-6 Home Insurance Policy?

The HO-6 policy is for people who live in a condo or a co-op. Known as “walls-in coverage,” a condo insurance policy covers: