16 Different Types of House Insurance

Find out the different types of house insurance in the U.S. that you can avail of as a homeowner so you can be financially protected from unforeseen events that lead to damages to your home, personal belongings, and other liabilities.
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Home insurance form with model house, calculator, glasses, pen, and dollars on the side.

Home insurance in America isn’t required by law. Despite this, around 95% of homeowners have some sort of coverage plan in place. Home insurance policies can cost around $1,083 a year and is typically part of the condition of having a mortgage plan in place. The protection it offers is sometimes really valuable to the homeowner. The policies are usually outlined to provide protection from damage to the home structure, personal property, and liability.

Even though it is such an integral part of the housing industry, almost half the people don’t even understand liability insurance. It is important to know more about property insurance if you own a home. Here are the different types of home insurance policies that you can get for your home.

8 Basic Types of Home Insurance Policies
Person signing a home insurance policy form.

Insurance companies have a cheat sheet for different types of home insurance policies, which have become sort of the standard. There are eight basic types which will be offered to you wherever you go to get coverage for your home. They can vary a little from company to company but the same eight policies cover damage from different hazards that may harm you.

HO-1 (Basic Form)Plug caught on fire

The basic form policy only covers the structure of your home. You may be able to add a personal property to the plan in some cases, but people typically don’t get personal liability with this policy at all.

Here are the hazards that the policy will cover for you:

  • Fire/smoke
  • Explosions
  • Lightning
  • Hail/windstorms
  • Theft
  • Vandalism
  • Damage from vehicles
  • Riots and civil commotion
  • Volcanic eruption

HO-2 (Board Form)Sleet on the roof

Board Form policies are usually designed to include coverage for your belongings. They can also include some coverage for personal liability.

They cover all the hazards from HO-1 policy plans, as well as the following:

  • Falling objects
  • Weight of ice, snow and/or sleet
  • Freezing of household systems like HVAC
  • Accidental and sudden tearing or cracking of pipes and other household systems
  • Accidental overflow or discharge of water or steam
  • Sudden and accidental damage from electrical currents

HO-3 (Special Form)House insurance concept

The Special Form policy includes all the hazards outlined in HO-1 and HO-2, as well as any other hazards specifically excluded in the policy plan. Exclusion of the policy usually just includes earthquakes and flooding, but this can vary from policy plan to policy plan. The HO-3 coverage plan usually covers the home, attached structure, and belongings. They can also include personal liability coverage also.

HO-4 (Tenant’s Form)

Renters

The HO-4 policy usually covers the same hazards as the HO-2 policy plan, but the policy plan is specifically designed for renters. The Tenant’s Form doesn’t cover the home you live in, but can still cover your belongings. You may also add personal liability insurance coverage to this policy as well.

HO-5 (Comprehensive Form)

Home Damage

The Comprehensive Form policy is similar to the HO-3 plan since it provides protection against all perils except the ones explicitly excluded. It gives homeowners better protection for their belongings, as well as higher personal liability insurance coverage.

Of course, HO-5 policy plans can change from company to company but they usually exclude the following cases:

  • Earth movement
  • Flood
  • Water damage
  • Damage from an infestation of vermin or birds
  • Settling, bulging or shrinking of the home’s foundation
  • Pets and other animals
  • Mold, fungus, and rot
  • Intentional loss
  • War, nuclear hazard, and government action
  • Ordinance or law
  • Smog, corrosion or rust

HO-6 (Condo Form)

Condominium

The HO-6 policy is specifically designed for condominium owners. The Condo Form is similar to renter’s insurance policies since it offers protection for personal liability and belongings. Additionally, it provides protection for condo structure’s that you are responsible for such as the floors, ceiling, and walls. The hazards covered under the policy plan are usually similar to that of HO-3.

HO-7 (Mobile Home Form)Caravan homes

The Mobile Home Form is similar to the HO-3 policy plan, but it is specifically targeted towards manufactured and mobile homes. You will have to study the insurance company’s policy plan carefully to see what hazards are excluded in the coverage plan.

HO-8 (Older Home Form)

Historic homes

The Older Home Form is specifically designed for older homes and has the same type of coverage as the HO-3 policy plans. This plan isn’t based on the date of when your home was built; however, most registered landmarks and historic homes have such insurance policies in place.

Types of Home Insurance

Now that you have learned about the different policy plans that you may be able to avail for your home, here are the different types of insurance that are available for purchase.

Dwelling CoverageNew home

Dwelling coverage is the most basic insurance policy that homeowners should definitely get. Such insurance plans usually include protection for the basic structure of your home. This can include built-in appliances, ceilings, floors, walls, and any other attached structures. Dwelling coverage can also provide the homeowners with protection against perils such as theft, hail, fire, and vandalism. According to your policy limit, you may even be able to rebuild your entire home through the insurance plan in the event that there has been a total loss.

Buildings InsuranceHome insurance policy

Building insurance is similar to dwelling insurance. It provides homeowners with basic protection of the structure of the home. This can also include permanent fixtures in the kitchen and the bathroom like fittings and even your roof. This insurance policy can even extend to outdoor buildings within the property line such as greenhouses, shed, and garages; however, it does not include outdoor gates, walls, and fences in most cases.

Building insurance isn’t a legal requirement in any state but mortgage lenders prefer that you get the home covered before you take out a mortgage. It is important to note that most dwelling coverage does not cover everything. You will need to customize your policy and include additional coverage plans according to your own preferences and needs.

Contents CoverageHome interior

Contents coverage protects all the items within the home such as your clothing and furniture. In case any incident occurs in the future, you would be able to receive funds for the value of these items according to your policy plans. Some plans also offer personal liability damages as well.

This plan is really important for any homeowner, but people often overlook it. If you actually stop to think about the sheer amount of belongings in the home, you would realize just how much it would cost to replace everything. This cost can come to tens of thousands of dollars to replace your belongings in case of a fire or flooding.

The contents policy plan protects your belongings from hazards like theft and fire or water damage. It can include everything such as clothing, books, furniture, decorations, paintings, etc. Even if the policy doesn’t pay in cash for your damaged belongs, most plans will provide replacement cost coverage for your broken TV or damaged furniture.

If you are planning on renting a flat or home, you won’t need to spend money on protecting the building. This way, you can focus more on protecting your contents and self inside the home. This also includes students or people sharing a home; when there are more people in the home, there are more chances that something can happen to your belongings. Many tenants even insist that you take out some form of content coverage before renting the home to you, which is why it is always a good idea to check up on content home insurance plans.

Landlord InsuranceRenter

Renting out your home doesn’t mean that you can absolve yourself of all responsibility of upkeep and maintenance of the home. Standard building insurance policies aren’t enough for landlords, which is why they need to look at the Tenant’s Insurance policy plans. It is specifically designed for the needs of the landlord such as public liability and loss of rent.

It does not include insurance for the structure or dwelling, but rather allows some benefits to the homeowner. There can be small exceptions that tenants can include the structure but that is rare. It can provide liability insurance and protection against perils like vandalism, theft, and fire. Most insurance plans also cover expenses for when the dwelling becomes uninhabitable.

Since this insurance policy only protects the tenant’s personal property and provides liability coverage instead of the actual dwelling itself, you will find that this policy plan is more affordable than homeowner policy plans. The renter of the building will have to get a homeowner’s plan for their belongings but bear no real responsibility for the landlord’s belongings.

Personal LiabilityInjury in the home

Personal Liability provides coverage for any bodily injury that has occurred in your home. It can also cover the injury of a guest that has sustained in your home, as well as property damage coverage that occurred from the incident.

Optional Home Insurance PlansHome

The plans stated above are usually the more important ones that homeowners should focus on. However, it is always a good idea to look at additional coverage plans that will provide you and your family with better protection.

Flood InsuranceHome interior inundated by flood.

Flood insurance is kept in place to protect your home and belongings from any damage caused by flood-related incidents. These policies are separate from other homeowner plans and come with their own deductibles. Such policy plans are really vital if you live in an area or state which is prone to flooding. Some areas even require homeowners to get flooding insurance if the situation is really risky.

The federal government also has its own plan in place that you can purchase if your home is at risk of flooding. The insurance is under the National Flood Insurance Program. The program includes insurance policies which are backed by federal funds through local insurance providers. You can buy the policy from an agent that works with the federal program or go to private insurers for your own plan.

Flooding has become a really common issue in the United States due to heavy storms in many areas. It affects hundreds of uninsured homeowners each year even though it is so common. The damages caused by flooding can put a huge dent in any homeowner’s wallet, which is why it is so important to get flood insurance beforehand. You should definitely look at flooding insurance policies if your home has a moderate to high risk of flooding.

Earthquake InsuranceHouse damage by an earthquake

Earthquake insurance covers the cost of the home in case damage occurs from an earthquake. This policy is separate from other homeowners’ insurance policies and has its own deductible.

Earthquake insurance isn’t backed by the federal government like flood insurance is. There are some state-level policy plans that you can turn to such as the California Earthquake Authority. Many areas which are earthquake-prone will also let you add earthquake coverage to the general homeowner policy plan that you have in place.

Earthquake policy plans are usually really affordable upfront since such events are rare. However, they can be expensive when you have to make a claim. Such policy plans usually charge the home between 10-20% of the dwelling coverage limit to make the claim. For example, if you have a $100,000 worth of coverage, you will have between $10,000 and $20,000 deducted from your settlement. Nevertheless, such policy plans can still come in handy at rebuilding your home if there is an earthquake.

Replacement Cost CoverageReplacement TV

Replacement Cost Coverage plan is an additional level of protection that you may need in case your home faces a serious loss. In case of a total loss where you have to replace your belongings, this plan can really help you out.

If you think about everything in your home that may need replacement after a fire, flooding, earthquake or any other serious incident then it can add up to tens of thousands of dollars. This is why it is a good idea to take out an additional replacement cost coverage plan so that you are protected in such events.

Water BackupSewere backup

Water backup from the sewer protects your home from the damage that can occur from drain or sewer backups. Even though it is such an unfortunate event, it is actually a really common issue faced by homeowners every once in a while.

Most homeowner insurance policies don’t include sewer-related plumbing damage, which is why it is a good idea to take out a separate policy. It can be really helpful, especially if you live in a building with an old sewer system.

Other Structure Insurance Plans

Shed in the backyard

Other Structure Insurance plans cover any property that is unattached to the home. This can include structures like greenhouses, garages, sheds, and gazebos. It can generally be a good idea to ensure such structures as well since you may have to pay out of pocket otherwise, which can be quite costly.

Medical PaymentsMedical payments

Medical payments coverage covers the cost of any medical expense that results from an accident on the homeowner’s property. This coverage can include the immediate medical treatment of any guest on the homeowner’s property without an inquiry into the fault.

Ordinance or Law InsuranceLaw Fees

Legal fees home insurance includes any costs that may be occurring for rebuilding your home to fit in with the current building codes after a covered loss has occurred. Getting law insurance can be a good idea if your home is old since there can be several new codes that the home isn’t currently adhering to.

Valuable Insurance

This insurance is usually for high-value items that you may have at homes such as fine art, antiques, and jewelry. It is often a nationwide coverage, which is great since you don’t want to lose such valuables.

Brand New Belongings

Brand New Belongings is a new form of add-on insurance plan that many companies offers funds to replace or repair specific items after a covered loss has occurred. This means that you will be able to get certain funds insured without deductions of depreciation or deterioration.

Better Roof Replacement

Better Roof Replacement is also an optional coverage plan that can help homeowners build a safer and stronger roof in your home. This could provide ample protection for the residents in your home.

The Amount of Protection Covered By Home Insurance PoliciesInsurance paying for costs

The covered hazards are of the main parts of insurance policies but there is another part that is just as important: the amount of protection that your insurance plan will be providing you with.

Typical policies for homeowners can include limits on your payout for the home and structure, as well as your personal property. Policy limits also exist for personal liability policy plans but are usually stated separately. It is important to realize that knowing the mere dollar amount you will be getting isn’t enough to help you pick out the type of insurance policy plan you need. You will also need to understand how the plan you are about to choose will add value to your home if there is any damage that occurs.

There are three main value additions that insurance companies will provide you with that you need to look at as well.

Actual Cash ValuePurchasing a home

The Actual Cash Value policy plan is based on the market value of your home. This is usually derived from the amount you paid for the home. For personal property, it is derived in the same. This means that the limit is based on the initial cost that you paid for the items or property, which is then subtracted by the depreciation for the number of years you’ve had it.

However, this means that if you face a total loss and need to rebuild the home, the ACV will not be enough to cover the cost. This is why many of the insurance policies are based on other value options.

Nevertheless, it is still not entirely uncommon for personal property insurance to cover the costs according to the ACV. This means that if you bought a TV for $5,000 a decade ago and it gets damaged in a fire, you will never get the full $5,000 for it. You may get 10% of the money based on how the company calculates depreciation.

Replacement Cost CoverageFlooding of home

The replacement cost of the home is based on the money it is taking to rebuild in today’s market. For example, you paid $150,000 for your new home but it burns to the ground five years later. Since after five years, the ground, labor, and materials are more expensive, the cost to rebuild the home will come to $175,000.

This is the best type of homeowners’ insurance coverage plan that you can get since it covers the cost in a fairer way. If your home faces a total covered loss then you will be able to rebuild the home with the same fixtures, finishes, features, and space. It is important to keep in mind while you are calculating the amount of coverage you need that you don’t count the value of your property in the replacement costs. This is due to the fact that the land remains yours even in the event of a total loss.

Guaranteed Replacement Cost

This is the most common option in homes that have any special features or have historic value. These special features such as detailed wood carvings need a different coverage plan since they can be harder to replace. In fact, they can often cost even more to replace than their actual market value may be.

Getting home insurance is an important step to being a responsible homeowner. It allows you to feel secure in your home, as well as ensure that your pockets will be safe in case of any adverse event. There are many types of homeowners insurance available in the market and the type of policy you choose should be according to your personal preferences and needs.









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