Dwelling policies are meant to protect dwellings of all sorts. They normally include property coverage and liability coverage, but the perils that they protect from are written differently. They have different designations.
HO-1 policy
It is a basic form policy or a peril coverage, and the perils it names and covers are:
- Vandalism
- Damage from vehicles
- Fire or smoke
- Lightning
- Explosions
- Damage from aircraft
- Windstorms or hail
- Volcanic eruption
- Theft or malicious mischief
- Damage from Riots and civil commotion
Liability coverage nor coverage for personal items within the dwelling are included. Also, property is covered on an actual cash value or ACV basis. That is the depreciated value of the dwelling, not the replacement costs.
HO-2 policy
Broad form coverage. This form does cover liability and personal property plus some other items, and the list of perils is broader than the basic form policy, but it is still a named-peril policy as opposed to an HO-3, which is comprehensive.
HO-3 policy
This special form is the policy most often written for homeowners. It covers the dwelling on a special form basis with replacement cost (not market value.) There is no list of perils; there is just a small list of exclusions including:
- Mold
- nuclear hazard
- Hurricane
- Flood
- Earthquake
Personal property is insured on a named peril basis. Unattached structures are also covered. Loss of use, which pays for living expenses after a covered loss, is generally covered when the owners have to move to temporary quarters. Different insurance carriers may provide different additions to the original coverage protections, so it is important to review exactly what is covered and what is not. Decide what is important in your situation.
HO-4 policy
It is called renter policy and protects a renter, who needs coverage only for his contents and for liability. It typically also covers loss of use.
HO-5 policy
It is comprehensive for all risk content. This is an HO-3 policy with better coverage for content. It is written on higher-end homes and is more costly than HO-3, but of course, it protects more fully. It is worth your while if you want to better protect your contents.
HO-6 policy
This is the condominium (or townhouse) coverage. Since the owner of a condo does not own the structure, this form covers interior structures (cabinets, flooring, fixtures) in addition to contents and liability and loss of use. It also has a loss assessment coverage, which would cover the assessment that the homeowner’s association might levy if there were a loss of structure to a covered peril. The coverage for interior structures and loss of use is variable, and the policy owner should make sure there is sufficient coverage for each type of contingency.
HO-7 policy
It is the mobile home coverage. This type of policy is similar to an HO-3 policy but is written for mobile homes, so may not cover separate structures.
Key Takeaways
As before, all of the above policies have variations depending on the insurance company that writes the coverage. As with Auto Insurance, it is critical to ask questions and compare to determine which is best for you.
