The In’s and Outs of Home Owner and Renter Policies
Here’s a high level overview for the types and levels of insurance that is typically available in each type of insurance and property type. We’re simply going over some of the considerations as well as covered and non-covered perils.
HO-1: most basic
Covers: Home and property: actual cash value PLUS 10 perils
i.e. fire/lightning, windstorm/hail, explosion, riots, aircrafts, vehicles, smoke, vandalism, theft, falling objects
*very rare, generally aren’t offered
HO-2: more basic
Covers: Home: replacement cost; personal property: actual cash value PLUS 6 additional perils
Ie. previously mentioned PLUS weight of ice or snow, overflow from stream, freezing, volcanic eruption, accidental damage from a power surge, accidental tearing/burning etc. from built-in appliances (water heater, A/C etc.)
HO-3*: basic, most common. “all-risk” coverage on your home, with exclusions based on insurance policy.
Covers: Home: replacement cost; personal property: actual cash value PLUS previously mentioned perils
*Can add a replacement cost endorsement to your personal property coverage for a small additional premium
HO-4: for renters
Covers: personal property (inside the property and not in the property) at replacement cost, liability and living expenses PLUS previously mentioned perils
HO-5: most comprehensive, second most common, “all-risk” coverage on your home AND property
Covers: home and property at replacement cost, high end property such as jewelry, furs etc., PLUS previously mentioned perils
HO-6: for condo owners
*HOA insurance, or the “master policy” covers: building structure, common areas, structure of your unit, personal property, loss of use, personal liability, medical payments, loss assessment coverage
*Coverage depends on your condo association’s HOA insurance.
HO-7: for mobile home, essentially an HO-3 specifically for mobile homes
Includes: trailers, RVs, sectional homes, modular homes, double wide and single wide homes
HO-8: homes that don’t meet insurer standards, similar to an HO-1
Covers: 10 perils and reimbursement is determined by the home’s actual cash value
*for older homes with outdated plumbing, wiring, roofing etc.
When in doubt, HO-3 or HO-5 it out
When to HO-3: more often than not, this is the one you will be offered
When to HO-5: if you qualify, go with this one. Upfront it is more expensive but in the long run, it will be the most cost effective