Wednesday, September 27, 2023
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The Main Types of Home Insurance Explained

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Last year, the median age of home buyers dipped to 45 after hitting a record high at 47 in 2019 and into 2020. It’s become a lot harder for first-time homebuyers to enter the housing market because of the pandemic.

Now that it’s 2022, the market is starting to stabilize again. Although still a seller’s market, you can find a home fit for your needs. Doing so requires purchasing homeowners insurance.

Keep reading to learn the types of home insurance to choose from.


HO-1 insurance policies are the most basic form of homeowners insurance. Your home is typically covered at its cash value under this policy. Only sometimes are personal belongings covered.

This insurance form typically covers damage or loss caused by specific perils that include:

  • Fire or lightning
  • Hail or windstorm
  • Civil commotion or riot
  • Vehicles
  • Smoke
  • Vandalism and theft
  • Volcanic eruptions

A lot of insurance carriers no longer offer this type of policy because it provides little coverage. You can find a better plan that fits your needs at


Another one of the types of home insurance policies is HO-2, or broad form homeowners insurance. It provides coverage for more perils compared to the above policies.

This policy type typically covers your home at its replacement cost. Personal property is also covered at its cash value.

HO-2 covers everything that HO-1 does plus the following perils:

  • Freezing
  • The weight of snow or ice
  • Accidental overflowing of water
  • Bulging or cracking
  • Falling objects
  • Accidental discharge from an artificial electrical current

The coverage is still limited and isn’t as common as HO-3 policies.


HO-3 is another policy for insuring a home and is the most common type of homeowners insurance.

Under HO-3 insurance or special form coverage, your home is covered at its replacement cost. Your personal property is covered up to its real cash value.

You can add an endorsement in this policy to provide replacement coverage for personal property. This comes at an additional cost.

HO-3 differs from HO-1 and HO-2 policies because it covers your home against damages caused by any peril except for those excluded in the policy. Commonly, these are the perils not covered with HO-3 insurance:

  • Flood
  • Earthquake
  • Mudslide/landslide
  • Sinkhole
  • Neglect
  • Act of war or government action

For most homeowners, this is the best policy option. If you want something with a higher level of coverage, HO-5 is a better policy.

HO-5 is insurance for homeowners that want added protection. For example, if you have a lot of high-value personal property in your home, this is the coverage for you.


When buying insurance for a place you are renting, you’ll opt for HO-4 policies, otherwise known as contents broad form.

Renter’s insurance covers personal property at its replacement cost against perils mentioned in an HO-3 policy. It also covers living expenses if your rented home becomes unlivable.

Depending on the provider, you may or may not have liability coverage.

Types of Home Insurance to Choose From

As a homeowner, buying insurance is one of the responsibilities you have. Because there are a lot of types of home inurance policies and coverage options, it can be hard to choose.

HO-3 is the most common form of homeowners insurance because it has just enough coverage. For additional protection, opt for HO-5 instead.

For more guides on finance, check out the other posts on our blog.


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