Your Homeowners Insurance Policy

What is a home insurance policy?

Your homeowners insurance policy outlines your coverages, including limits and stipulations, that are included as part of your insurance protection for you and your home. Learn more about how to read a homeowners insurance policy.

Types of homeowners insurance policies

You may come across these terms while shopping for home insurance. The different tiers of these policies dictate what's covered as part of your insurance coverage and what perils you're covered for. What is an insurance peril?

To learn more about how to figure out what type of policy you need, see the summarized information below.

What type of homeowners insurance do I need?

Insurance companies use terms like HO-3 and HO-5 to identify the type of coverage you have (for open or named perils) and how any potential claim would be paid out (actual cash value vs. replacement cost). Below is a summary of how these policy types work to cover your property and personal belongings.

HO-1 — Basic form

An HO-1 policy is the minimum level of homeowners coverage and only protects the structure of your home from specific, named perils. It does not provide coverage for your home's contents, your personal liability, and additional living expenses.

HO-2 — Broad form

Often called a named peril policy, this policy covers your dwelling and personal property from the named perils that are listed on your home insurance policy.

HO-3 — Special form

Providing more robust coverage for the structure of your home than an HO-2, an HO-3 policy will cover your dwelling on an open peril basis; meaning, you are covered against all sources of damage as long as the peril is not specifically excluded in your policy. However, your personal property is still only covered for named perils.

HO-4 — Renters insurance

Put simply, an HO-4 policy equates to renters insurance, which doesn't provide any coverage for the dwelling you're occupying as a tenant. Covered losses to your personal belongings are protected a named peril basis, and the policy also provides liability coverage and additional living expenses.

HO-5 — Comprehensive form

If you're looking for the broadest type of policy that will protect your home and personal property from any peril that isn't excluded in the policy, consider an HO-5 homeowners policy. Keep in mind that even open peril policies come with limitations; in fact, most natural disasters, like floods and earthquakes, are never covered by homeowners insurance.

HO-6 — Condo insurance

Specifically for condo owners, an HO-6 is a named peril policy. Condo associations are likely to have some sort of coverage for physical damage — bare-walls or all-in — so be sure to understand what kinds of property your policy covers.

HO-7 — Mobile home form

An HO-7 specifically covers mobile or manufactured homes and trailers on an open peril basis, while any personal property is covered only for named perils. This is essentially an HO-3 but for mobile homes.

HO-8 — Modified form

If your home is older than 40 years old and you're unable to acquire any of the conventional policy types listed above, an HO-8 may be what you're looking for. However, coverage for your property and home contents will be more limited than an HO-2, HO-3 or HO-5, as it only provides protection against named perils.

What are named perils?

There are 16 named perils that insurance companies list on your policy as the specific perils you're insured against. Any source of damage outside of these 16 won't be covered.

1. Lightning or fire
2. Hail or windstorm
3. Damage caused by aircraft
4. Explosions
5. Riots or civil disturbances
6. Smoke damage
7. Damage caused by vehicles
8. Theft
9. Vandalism
10. Falling objects
11. Volcanic eruption
12. Damage from the weight of snow, ice, or sleet
13. Water damage from plumbing, heating, or air conditioning overflow
14. Water heater cracking, tearing, and burning
15. Damage from electrical current
16. Pipe freezing

What are open perils?

An open peril policy covers all losses to your property and personal belongings unless they are specifically excluded in your policy. The following are typically excluded from an open peril policy:

1. Freezing pipes and systems in vacant dwellings
2. Damage to foundations or pavements from ice and water weight
3. Theft from a dwelling under construction
4. Vandalism to vacant dwellings
5. Latent defects, corrosion, industrial smoke, pollution
6. Settling, wear, and tear
7. Pets, other animals, and pests
8. Weather conditions that aggravate other excluded causes of loss
9. Government and association actions
10. Defective construction, design, and maintenance