6 Types of Affordable Home Insurance Policies

More likely than not, your mortgage lender requires you to purchase home insurance to protect its investment. Given the numerous expenses that come with buying or renting a home, you might be a little apprehensive about giving up even more of your hard-earned money. But, a good home insurance policy will protect you from losing the biggest investment of your lifetime and the valuable possessions you’ve collected inside of it. When shopping for home insurance, you’ll have to consider these different types of policies fit for your situation:

  1. HO1 – Basic Form Homeowner Policy: Basic form coverage protects against the 11 most common perils of damage, including windstorm or hail, fire or lightning, theft, vandalism or malicious mischief, damage from vehicles or aircraft, explosion, riot or civil commotion, smoke, glass breakage, volcanic eruption, and personal liability — floods and earthquakes are excluded from coverage. Other belongings may be included in the policy if they’re specifically mentioned.
  2. HO2 – Broad Form Homeowner Policy: A step up from basic form coverage, broad form coverage, as the name indicates, is more encompassing, protecting your home from 17 listed perils. Along with the ones previously listed under basic form, it protects against weight of ice and snow, falling objects, broken glass, and some water damage.
  3. HO3 – Special Form Homeowner Policy: Families who seek the maximum protection select special form coverage, or “all risk” coverage, which protects your home from all risks of physical loss, save for a few exclusions, such as flood, earthquake, war, or a nuclear accident. It’s the most common form of coverage, as it’s the second-most comprehensive, also covering belongings within the home on a named peril basis.
  4. HO4 – Renter’s Insurance: Those without a mortgage who opt for renter’s insurance are covered from the 17 perils mentioned in broad form coverage — earthquakes and floods are again excluded. Along with protecting personal property, it provides liability coverage for personal injury or property damage inflicted on others. Typically less expensive than other types of policies, renter’s insurance requires an inventory of your belongings to ensure you won’t lose them forever in the event of an unforeseen disaster.
  5. HO5 – Premier Homeowner Policy: As the most comprehensive option for homeowners, premier coverage includes everything in special form coverage and more. Belongings are covered on an open peril basis unless explicitly listed otherwise. Similarly, only causes of loss that are excluded from the policy aren’t covered.
  6. HO6 – Condominium Policy: Previously not required by lenders, condominium coverage is now an essential aspect of a condo owner’s investment. While the master insurance policy covers areas such as hallways, walkways, the roof, basement, and elevators, it doesn’t cover the inside of single units and the belongings of those unit owners. Condo policies cover damage to personal property, walls, and floor covering. Personal liability coverage is also included.

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