Yes. A person who owns his or her home would have a different policy from someone who rents. Policies also differ on the amount of insurance coverage provided.
The different types of homeowner policies are fairly standard throughout the country. However, individual states and companies may offer policies that are slightly different or go by other names such as “standard” or “deluxe.”
If you own the home you live in, you have several policies to choose from. The most popular policy is the HO-3, which provides the broadest coverage. Owners of multi-family homes generally purchase an HO-3 with an endorsement to cover the risks associated with having renters live in their homes.
HO-1: Limited coverage policy
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. HO-1 insurance is a named perils policy, meaning it only covers your home in specific situations, which typically include:
Damage from aircrafts or vehicles
Explosions
Fire and lightning
Hail and windstorms
Riots
Smoke
Theft
Vandalism
Volcanic eruption
HO-2: Basic policy
An HO-2 insurance policy is also known as a broad form and covers your home and your personal belongings. Most insurance companies will cover your personal belongings no matter where they are at home, in your car or somewhere else. HO-2 policies may include liability coverage in some circumstances. To determine if your HO-2 policy includes liability coverage, contact your insurance carrier directly.Like an HO-1 policy, HO-2 insurance is a named perils policy that covers your home and your personal items from the same circumstances covered by an HO-1 policy. This policy type covers everything that the HO-1 covers, but also adds a few additional perils:
Accidental discharge or overflow of water or steam within the home
Tearing apart, burning, cracking from some household systems
Freezing of pipes and heating and air conditioning systems
Sudden and accidental damage from certain electrical currents
A falling object
Weight from ice, snow or sleet
HO-3: The most popular policy
The most common type of homeowners insurance is the HO-3 Special Form policy, which covers your home, your personal property, liability, additional living expenses and medical payments. An HO-3 is considered the standard coverage. It gives you ‘open perils’ coverage for your home structure, which protects you from all disasters unless the policy lists exceptions. However, you receive ‘named perils’ coverage for personal possessions, which applies to disasters named in the policy. Your home and other structures typically have the following perils excluded:
Defective construction or maintenance
Foundation issues
Government actions
Pet or animal damage
Pollution and corrosion
Theft, vandalism and frozen pipes in vacant houses
Wear and tear
Flood
Earth movement
War
Nuclear hazard
Intentional loss
Neglect
Mold, fungus, wet rot
Power failure
Ordinance or law
Mechanical breakdown
Smog, rust, or corrosion
Birds, rodents, vermin
Any animals owned by the insured
Since your personal property is covered under named perils, your personal items are usually covered under the following circumstances:
Damage from aircrafts or vehicles
Damage from the weight of snow or ice
Damages caused by an electrical current
Explosions
Falling objects
Fire and lightning
Hail and windstorms
Pipes freezing
Riots
Smoke
Theft
Vandalism
Volcanic eruptions
Falling objects
Water damage from plumbing or HVAC overflow
Water heater damage
HO-4: Renters Insurance
An HO-4 insurance policy is another name for standard renters insurance. Renters insurance protects your personal property and offers liability coverage. Some policies also include additional living expenses, which could help you pay for food and hotel bills if your home were damaged and you had to move out temporarily. Because renters do not own their homes, HO-4 policies do not offer any coverage for the building’s structure. Renters insurance policies are usually named perils policies that cover the following events:
Damage from aircrafts or vehicles
Damage from the weight of snow or ice
Damages caused by an electrical current
Volcanic eruptions
Explosions
Falling objects
Fire and lightning
Hail and windstorms
Pipes freezing
Riots
Smoke
Theft
Vandalism
Water damage from plumbing or HVAC overflow
Water heater damage
H0-5: Open Perils
If you are looking for the gold standard of home insurance, an HO-5 policy is it. This type of home insurance is the most comprehensive option available, covering your home, your personal belongings, liability, additional living expenses and medical payments for others. These policies also have higher available limits for things like jewelry. With an HO-5 policy, your home and your personal items are both covered under an open perils policy, which means that it will protect you from anything not specifically excluded in your policy. Some common exclusions include:
Earth movement
Government actions or laws
Infestation of birds, rodents or insects
Intentional loss
Mechanical breakdown
Mold
Nuclear hazard
Pets
Vandalism if the property is vacant more than two months
War
Water damages from floods or sewer backup
H0-6: Condo/Co-op
HO-6 insurance is specifically for condo owners. It covers everything inside your unit, as well as personal liability and additional living expenses. Condo policies sometimes include a small amount of dwelling coverage, as some condo owners are responsible for the interior walls of their units. Because condo residents only own their unit, and not the whole building, the condo association has its own insurance policy that protects common areas, grounds and external parts of the building. Condo owners help pay for the association’s insurance in the form of condo or HOA fees. HO-6 policies are named perils policies which generally protect coverage for:
Damage from aircrafts or vehicles
Damage from the weight of snow or ice
Damages caused by an electrical current
Explosions
Falling objects
Fire and lightning
Hail and windstorms
Pipes freezing
Riots
Smoke
Theft
Vandalism
Volcanic eruptions
Falling objects
Water damage from plumbing or HVAC overflow
Water heater damage
HO-7: Mobile/Manufactured Homes
An HO-7 insurance policy covers mobile or manufactured homes, including trailers, sectional homes, RVs and modular homes. This type of policy provides coverage for your home’s structure, your personal belongings, liability, additional living expenses and medical payments. The exterior of your home is covered under an open perils policy, which covers any situation that is not explicitly stated in your insurance policy. However, HO-7 policies cover your personal belongings under a named perils policy. That means your personal items are only covered under a specific list of circumstances, including:
Damage from aircrafts or vehicles
Explosions
Explosions
Fire and lightning
Hail and windstorms
Riots
Smoke
Theft
Vandalism
HO-8: Older home
The last type of homeowners insurance is the HO-8 policy, which is ideal for homeowners who have older homes or homes that would be difficult to replace. This includes architecturally significant houses, historic landmark homes or homes built with materials and methods that are not common today. If it would cost more to repair your damaged home than its current value, an HO-8 policy may be a suitable option. HO-8 policies include the standard coverage for dwelling, personal property, liability, additional living expenses and medical payments. Both your home’s structure and your personal property are covered under a named perils policy. This includes events such as:
Damage from aircraft or vehicles
Explosions
Explosions
Fire and lightning
Hail and windstorms
Riots
Smoke
Theft
Vandalism
Your level of Coverage
Regardless of whether you are an owner or renter, you have the following three options:
1. Actual cash value.
This type of policy pays to replace your home or possessions, minus a deduction for depreciation.
2. Replacement cost.
The policy pays the cost of rebuilding/repairing your home or replacing your possessions without a deduction for depreciation.
3. Guaranteed or extended replacement cost.
This policy offers the highest level of protection. A guaranteed replacement cost policy pays whatever it costs to rebuild your home as it was before the fire or other disaster–even if it exceeds the policy limit. This gives you protection against sudden increases in construction costs due to a shortage of building materials after a widespread disaster or other unexpected situations. It generally won’t cover the cost of upgrading the house to comply with current building codes. You can, however, get an endorsement (or an addition to) your policy called “Ordinance or Law” to help pay for these additional costs. A guaranteed replacement cost policy may not be available if you own an older home.
Some insurance companies offer an extended, rather than a guaranteed replacement cost policy. An extended policy pays a certain percentage over the limit to rebuild your home. Generally, it is 20 to 25 percent more than the limit of the policy. For example, if you took out a policy for $100,000, you could get up to an extra $20,000 or $25,000 of coverage.
Even though a guaranteed/extended replacement cost policy may be a bit more expensive, it offers the best financial protection against disasters for your home. These coverages, however, may not be available in all states or from all companies.