There are five types of homeowner's policies where content is mandated by each individual state. While the basic coverage for each type of policy is going to be the same for each company, there are some optional variations between different carriers. Your agent can explain the differences between the various contracts to you. Let's take a look at the five basic types of Homeowners' policies:
- HO-1: Provides only minimal basic protection. Due to its many restrictions on coverage, it is available in only a handful of states.
- HO-2: Costs about 10% more than HO-1 but removes many of the restrictions imposed by an HO-1 policy.
- HO-3: Costs about 25% more than HO-1. As respect to the dwelling, it covers everything not specifically excluded in the policy. Your personal property is insured for 16 specific types of occurrences (called perils).
- HO-5: Costs more than the HO-3 but covers both your dwelling and personal property for all occurrences except those specifically excluded by the policy.
- HO-8: Used for unique or historical structures where there is a good supply of similar homes in the local area where you could buy a replacement for a lower cost than rebuilding the damage of a loss.
IMPORTANT NOTE: The Classifications HO-1, 2, 3, etc. are used in policies issued on forms based upon those of the Insurance Service Office (ISO). Other carriers may use forms of their own design not utilizing the ISO "HO" convention of naming. In all cases, coverage is substantially similar due to the mandated forms of protection in each state's version of the form.
There are two additional classifications of coverage for residential insurance other than those of a dwelling owner:
- HO-4:The "Tenants" or "Renters" policy is used by those individuals who do not own their home but rather rent the residence;
- HO-6: This form is used by condominium or cooperative unit owners.