Homeowners Insurance Explained — HO-1 Through HO-8 and Which Policy You Actually Have

Why your policy TYPE matters more than your premium

Most homeowners compare insurance policies on premium dollars. That's backwards. The policy type — what's written on the declarations page as HO-1, HO-2, HO-3, HO-5, etc. — controls what gets paid after a kitchen fire, a burst pipe, a theft, a windstorm claim. Two policies at the same premium can pay wildly different amounts for the same event.

The US standardized the eight forms through ISO (Insurance Services Office) decades ago, and while carriers add endorsements on top, the underlying HO-numbered form tells you 80% of what you need to know about your coverage.

HO-1 — Basic Form (rarely sold; upgrade if you have it)

Named-perils coverage only: fire, lightning, windstorm, hail, explosion, riot, vehicles, aircraft, vandalism, smoke, theft, glass breakage. Anything not named is not covered.

Almost no carrier still sells HO-1 in 2026 because it leaves too many gaps for modern buyers. If your declarations page says "HO-1," call your agent and upgrade. The premium difference to HO-3 is typically $150-400/year and buys dramatically more coverage.

HO-2 — Broad Form

Expands HO-1 with additional named perils: falling objects, weight of ice/snow/sleet, accidental discharge or overflow of water from plumbing, sudden and accidental tearing apart of heating systems, freezing of plumbing, and sudden and accidental damage from artificially generated electricity.

Both dwelling and personal property are covered on named-peril basis. HO-2 is still a named-perils policy, which means if something happens that isn't on the list, you're not covered.

HO-3 — Special Form (THE standard)

This is what ~80% of US homeowners have. Open-peril coverage on the dwelling (covered for anything not specifically excluded) and named-peril coverage on personal property.

HO-3's structural-exclusions list is the detail that controls claim disputes. Standard exclusions: earth movement, flood, war, nuclear hazard, neglect, intentional loss, governmental action, ordinance or law, and power failure. Optional add-ons close many of those gaps — earthquake endorsement, flood via NFIP, ordinance or law coverage for code upgrades during a repair.

HO-4 — Tenant Contents (renters insurance)

Named-peril coverage for personal property, plus liability and additional living expense. Does NOT cover the building itself — that's the landlord's policy.

Typical cost $150-350/year depending on coverage limits and zip code. Disproportionately high-value for the premium — a $25 burglary or a $200 water-damaged laptop claim pays out; a $100,000 liability judgment after a slip-and-fall in your apartment also pays out.

HO-5 — Comprehensive (worth the upgrade for high-value contents)

Open-peril coverage for BOTH the dwelling AND personal property. Whatever isn't specifically excluded is covered.

Premium is typically 10-15% higher than HO-3. For buyers with high-value electronics, art, jewelry, collectibles, or just a strong preference for less claim friction, HO-5 is worth the upgrade.

Practical example: a laptop "mysteriously scratched" during a move. On HO-3 it's not a named peril — denied. On HO-5 it's covered unless specifically excluded — paid.

HO-6 — Condo Unit-Owner

Covers the unit interior (walls-in), personal property, liability, and loss assessment (your share of damage to common areas charged back to you by the association). Works in tandem with the condo association's master policy.

Critical detail — read your condo association's master policy BEFORE buying HO-6. Master policies vary: some cover "bare walls" only (you need more HO-6 coverage), others cover "all in" including fixtures (you need less). Your HO-6 should fill the gap, not duplicate.

HO-7 — Mobile Home

HO-3 equivalent for manufactured / mobile homes. Named-peril structure reflecting the different claim profile of mobile homes (higher wind risk, lower fire-rating construction).

HO-8 — Older Home

For older homes where replacement cost significantly exceeds market value — think pre-1940 brownstones, historic homes with ornate detailing, or homes with now-unavailable materials.

Pays actual cash value or repair cost (whichever is lower), not full rebuild cost. This avoids over-insurance — you're not paying premiums against a $2M replacement quote on a home you could sell for $600K. Trade-off: if catastrophic loss, you may not get the home you had back.

The coverage gaps every form has

Every HO-form in the US excludes, by default:

• Flood. Requires NFIP (National Flood Insurance Program) or private flood policy.
• Earthquake. Separate endorsement or standalone earthquake policy.
• Normal wear and tear. Insurance pays for sudden damage, not slow deterioration.
• Intentional damage. By the insured or anyone listed on the policy.
• Sewer backup. Typically optional endorsement, ~$40-80/year — almost always worth adding.
• Mold beyond small amounts. Usually capped at $5,000 unless specifically endorsed.
• Power failure damage. Spoiled food from a multi-day outage is often not covered unless you have a specific endorsement.
• Animal damage beyond birds. Rodent, insect, and most wildlife damage not covered.

Replacement cost vs actual cash value — the single biggest wording trap

Replacement cost pays to replace with a new equivalent. Actual cash value (ACV) pays replacement cost minus depreciation. A 20-year-old roof on an ACV policy pays you 20-year-old-roof money, not a new-roof check.

Most policies default to replacement cost on the dwelling but ACV on personal property. If you want replacement cost on contents (recommended), endorse for it — the premium is typically $50-120/year. After a house fire, that endorsement alone can be the difference between being made whole and taking a five-figure loss on your personal effects.

When to upgrade your policy

From HO-1 or HO-2 to HO-3: almost always worth it. Marginal cost low, gap in coverage large.

From HO-3 to HO-5: worth it if you have high-value electronics, art, collectibles, or older wiring/plumbing (more "mysterious cause" claims).

Add sewer backup endorsement: almost always. Cheapest insurance-value dollar you can spend.

Add ordinance or law coverage: if your home is 30+ years old. Building codes have changed; a partial loss that triggers code upgrades during repair will cost you out of pocket without this endorsement.