Learn about Home Insurance

​As your largest investment, it's important to make sure your home has the proper insurance coverage. We'll protect your home and everything in it for a price that fits your budget.

What is Home Insurance?

Home insurance, also commonly called hazard insurance or homeowner's insurance (and often abbreviated in the US real estate industry as HO1), is a type of property insurance that covers a private residence. 

It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one's home, its contents, loss of use (additional living expenses), or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.

Home insurance policy types

Depending on the dwelling you live in and your home insurance needs, one of these eight home insurance policies should fit:

HO1

Often called a “basic form” policy, the HO1 is the most bare-bones coverage you can get. It covers:
  • Fire and lightning
  • Windstorm or hail
  • Explosions
  • Aircraft or vehicular damage
  • Smoke damage
  • Vandalism or theft (The HO1 limit on theft liability is $1,000 on average.)
  • Volcanic eruption
  • Riot or civil commotion
It should be noted that the HO1 usually only covers the structure of your house. Personal property is usually not covered, nor is personal liability.

The HO1 is a “named peril” policy. This means if the cause of the damage is not expressly listed in your policy, your claim will not be covered. Usually HO1 policies pay out claims at replacement cost. This is a popular choice, as claims for covered damage to your home pay out without depreciation being figured in.

If an HO1 policy doesn’t use replacement cost, it will pay out at actual cash value (ACV). This means that depreciation is figured into your claim amount. Make sure to know if your policy is replacement cost or ACV. It can be the difference between your claim being fully or partially paid out.

You don’t see many home insurers offering HO1 policies anymore. This is mostly because the following policy types offer much better coverage at reasonable prices. Many states have done away with the HO1 policy type completely.

HO2

This “broad form” policy provides all of the coverage of the HO-1, but also includes:
  • Building collapse
  • Frozen pipes, burst pipes and accidental steam discharge
  • Removal of personal property threatened by fire
  • Damage due to the weight of snow or ice
  • Damage from burst water heating systems
As well as providing dwelling coverage like the HO1, HO2 policies usually cover personal property. Some HO2s also cover personal liability. Like the HO1, the HO2 is a named peril policy and usually pays out at ACV.

HO3

The HO3 is also referred to as a “special form” policy. This is the most common choice for homeowners for its coverage and cost. It covers everything the HO1 and HO2 do, as well as personal property and liability coverage.

HO3 covers personal property for named perils in the policy. However, dwelling coverage is provided as “open peril”. This means that unless a peril is excluded in writing in your policy, it’s covered. Frequent exclusions include:
  • Earthquake
  • Government action
  • Flood
  • Power failure
  • Nuclear hazard
  • Mold
  • Wear and tear
  • Mechanical breakdown
  • Settling or expansion of the foundation

HO4

Similar in coverage to the HO2, “tenant form” policies are strictly renters insurance policies. If you rent a home, apartment or condo, an HO4 will cover your personal property against named perils. If you have $75,000 in HO4 personal property coverage, you should have a maximum of $75,000 to replace stolen or damaged belongings in the rental.

Most HO4s also provide personal liability and medical payments to others coverage. Dwelling coverage is not included in an HO4. This is simply because the structure of the rental unit should be covered under the landlord’s home insurance.

HO5

This is considered the highest-tier home insurance you can get. It is the most comprehensive coverage available to homeowners. HO5 is similar to HO3 coverage with some significant differences:
  • HO5 provides greater limits for expensive items like jewelry and electronics.
  • Both dwelling and contents are covered at open peril.
  • All damage and loss claims are paid at replacement cost.

Usually an HO5 policy is only available to new homes in low-risk areas. Still, it won’t hurt to talk to your home insurer and see if you qualify. If you meet the criteria for an HO5 and the price isn’t that much higher than an HO3 policy, it’s worth your while to get the HO5.

HO6

The HO6 insures condo units. It is designed to cover much of what your condo association does not. Personal liability coverage is included if someone is injured in your unit and you’re at fault. Guest medical coverage is included as well. If someone is injured in your condo, the HO6 will cover the medical bills regardless of whose fault it is.

Building property protection will pay for repairs to your unit, fixtures and interior if damaged by a named peril. Personal property coverage is provided for your belongings, as well as for named perils. You can chose a payout at ACV, or at replacement cost for a higher price.

HO7

This home insurance policy provides HO3-level coverage for mobile homes. Dwelling coverage is provided against open perils at replacement cost. Content coverage is provided against named perils and pays out by ACV.

The HO7 covers both the home and detached structures like fences or a garage.

HO8

The HO8 policy covers older homes that are more than 40 years old. It provides named peril coverage against the same perils listed in the HO1.

The key reason for the HO8 is the replacement cost of building materials used in older homes. If your home was built in the early 1900s, chances are the materials used are obsolete or very expensive to replace. This would make the standard HO3 or HO5 coverage cost prohibitive. An HO8 policy provides for the upgrading of materials used in older homes for current, up-to-date materials after a covered incident.
​
The standard HO8 policy pays out at ACV, but can be upgraded to replacement cost as an endorsement. well
​

Typical Home Insurance Coverages

Section I — Property Coverages
  • Coverage A – Dwelling
    Covers the value of the dwelling itself (not including the land). Typically, a coinsurance clause states that as long as the dwelling is insured to 80% of actual value, losses will be adjusted at replacement cost, up to the policy limits. This is in place to give a buffer against inflation. HO-4 (renter's insurance) typically has no Coverage A, although it has additional coverages for improvements.
  • Coverage B – Other Structures
    Covers other structure around the property that are not used for business, except as a private garage. Typically limited at 10% to 20% of the Coverage A, with additional amounts available by endorsement.
  • Coverage C – Personal Property
    Covers personal property, with limits for the theft and loss of particular classes of items (e.g., $200 for money, banknotes, bullion, coins, medals, etc.). Typically 50 to 70% of coverage A is required for contents, which means that consumers may pay for much more insurance than necessary. This has led to some calls for more choice.
  • Coverage D – Loss of Use/Additional Living Expenses
    Covers expenses associated with additional living expenses (i.e. rental expenses) and fair rental value, if part of the residence was rented, however only the rental income for the actual rent of the space not services provided such as utilities.
  • Additional Coverages
    Covers a variety of expenses such as debris removal, reasonable repairs, damage to trees and shrubs for certain named perils (excluding the most common causes of damage, wind and ice), fire department changes, removal of property, credit card / identity theft charges, loss assessment, collapse, landlord's furnishing, and some building additions. These vary depending upon the form.
  • Exclusions
    In an open perils policy, specific exclusions will be stated in this section. These generally include earth movement, water damage, power failure, neglect, war, nuclear hazard, septic tank back-up expenses, intentional loss, and concurrent causation (for HO3). The concurrent causation exclusion excludes losses where both a covered and an excluded loss occur. In addition, the exclusion for building ordinance can mean that increased expenses due to local ordinances may not be covered. A 2013 survey of Americans found that 41% believed mold was covered, although it is typically not covered if the water damage occurs over a period of time, such as through a leaky pipe.
  • Floods
    Flood damage is typically excluded under standard homeowners and renters insurance policies. Flood coverage, however, is available in the form of a separate policy both from the National Flood Insurance Program (NFIP) and from a few private insurers. 
Section II — Liability Coverages
  • Coverage E – Personal Liability
    Covers damages which the insured is legally liable for and provides a legal defense at the insurer's own expense. About a third of the losses for this coverage are from dog bites.
Available Endorsements Include (not limited to): 
  • Water Back Up & Sump Discharge or Overflow Coverage
  • Animal Liability Endorsement
  • Equipment Breakdown Enhancement Endorsement
  • Golf Cart Coverage Endorsements
  • Scheduled Personal Property Endorsement
  • Structures Rented to Others (Airbnb etc.)
  • Refrigerated Property Coverage​​​​​

    Contact us to learn more about the right homeowners insurance for you.
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Citizens: Discounts Brochure
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Citizens: Homeowners Brochure
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Citizens: Types of Homeowners Insurance Policies​ Brochure
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