Types of Policy

There are seven different types of homeowner's insurance (HOI), the most popular of which are known as HO-3 (for house owners), HO-4 (for renters) and HO-6 (for condo owners). The other homeowner's policies (HO-1, HO-2, HO-5 and HO-8) offer varying degrees of coverage - the smaller the number, the fewer types of damage the policy covers (and the lower the premium). Each type of policy is summarized below:

Basic Form - HO-1

HO-1 is a limited policy that offers varying degrees of coverage but only for items specifically outlined in the policy. This type of policy might be used to cover a valuable object in the home, such as an antique or painting, against certain named perils including fire, theft, lightning or smoke. If the loss occurs as a result of an un-named peril, there will be no payment by the insurance company.

Broad Form - HO-2

HO-2 is a limited policy that covers specific portions of a house against damage. Like HO-1, coverage is usually a 'named perils' policy, which lists the events that would be covered. HO-2 generally covers items against the same named perils as the basic form (HO-1) plus other perils such as falling objects, the weight of ice, snow or sleet, and the accidental discharge or overflow of water from a household appliance or plumbing system.

Special Form - HO-3

The special form (HO-3) policy is the most commonly sold type of home policy and is designed to offer a broad range of coverage for the structure of the home and its contents. It also includes liability cover for damage that may occur from daily use, and for any visitors who may encounter accident or injury on the premises. This type of policy, also known as an 'open perils' or 'all risk' policy, protects against all types of damage, except for those specifically excluded by the policy, such as war, flood or nuclear accident. HO-3 also protects personal belongings, but only for specific types of damage (typically at the HO-2 level).

Renters' or Tenants' Coverage - HO-4

This type of policy insures household contents and personal belongings (but not the building), of renters against the same perils detailed in the Broad HO-2 form. This policy can also cover liabilities arising from accidents and intentional injuries for guests as well as passers-by up to 150' of the domicile. Common coverage areas are events such as lightning, explosion, theft, vandalism, smoke, windstorm or hail, falling objects, snow, sleet, and weight of ice.

HO-5

HO-5 offers the same coverage to homeowners as HO-3, but extends full protection to all personal belongings, covering a wider breadth and depth of incidents and losses than HO-3. As a result, HO-5 is more expensive than HO-3; however experts recommend paying the higher premium. Not all insurance companies offer HO-5, in which case riders can be added to the policy to provide greater protection of personal belongings.

Condominium Owners Policy - HO-6

This type of policy is designed specifically for the owners of condos. It includes coverage for the part of the building owned by the insured and for the property housed within. It also provides personal liability protection when people injure themselves or suffer property damage in the insured unit. The liability coverage may cover incidents up to 150 feet from the insured property, all valuables within the home from theft, fire or water damage or other forms of loss. It is important to read the Associations By-laws to determine the total amount of insurance needed on the dwelling.

Modified Coverage Form - HO-8

This type of policy, often known as 'older home' insurance, provides dwelling and personal property coverage similar to the basic form (HO-1) policy but is designed specifically for older homes or home that do not meet all the underwriting standards applicable to other forms of home policies. This enables house owners with higher replacement cost than the market value to insure their property at the lower market value rate.