If you buy a home on a mortgage, the lender will likely require you to have a homeowners insurance plan, so their investment is protected. But even otherwise, it’s a good idea to purchase homeowners insurance since it will provide you the peace of mind in knowing that your financial expenses will be covered in case your home were to incur any damages.
But, given the various types of coverage options that exist, picking the right plan can seem confusing. That’s why we’ve compiled a list of the different types of homeowners insurance plans.
HO-1 – Basic Form
This plan offers very limited coverage and most home insurance companies don’t offer these plans anymore. It covers only 10 possible damages (compared to 16 damages covered by standard plans) and does not include liability.
HO-2 – Broad Form
This form offers more coverage than an HO-1 form, but it is a “named perils” plan, which means it covers only 16 types of damages. It doesn’t cover liability.
HO-3 – Special Form
This is what most homeowners get. It offers a minimum level of coverage that most mortgage loan providers require. Unless your property is in a high-risk location or is extremely high value, this plan is probably all you will need. These plans offer pretty comprehensive dwelling coverage. However, personal property coverage is limited to only “named peril” damages.
HO-4 – Renters Insurance Form
If you are leasing or renting a home or apartment, this is the policy you will need to get. It offers named-peril coverage, liability coverage, and personal property coverage at replacement cost.
HO-5 – Comprehensive Form
This plan offers the highest level of coverage, but it is also the most expensive. This plan offers “all risks” replacement cost coverage for personal property and dwelling and even better converge for expensive items. There may be a few exclusions though.
HO-6 – Unit Owners Form (Condo Insurance)
This policy covers a co-op or condo. Like HO-4 plans, these plans cover liability and personal property. You may need to opt for dwelling coverage separately if the condo association does not already provide it.
HO-7 Mobile Home Form
This plan is a modified version of the HO-3 policy, but it is meant for manufactured or mobile homes, including trailers.
HO-8 – Modified Coverage Form
This type of policy is pretty uncommon, but it offers coverage if your home is built with riskier materials or is old. This policy offers named-perils cash value coverage for personal property and dwelling.