Why are there so many different policies?

Homeowners insurance policies are somewhat standardized, but several policy forms exist to appropriately cover the different types of needs homeowners have. Coverage for the house itself can vary from coverage due to a few specified causes known as “perils” on the policy, or for virtually all perils except for a few exclusions. The variation in which perils are covered gives rise to some of the policy form differences.

The policy forms are numbered as HO-1 though HO-8. For example, HO-1, HO-2, HO-3, and HO-5 are conceptually the same policies for those with single-family homes, with the HO-2 covering more perilsthan the HO-1and the HO-3 covering more than the HO-2. The HO-5 coversthe most perils and provides the greatest protection to the homeowner. An HO-4 form is specifically for renters, and an HO-6 is for condos. These two are somewhat different because they insure only the personal property of the policyholder and not the physical home or “dwelling” as that is insured by other parties. The HO-7 is for mobile home owners and the HO-8 was designed for the unique needs of those who own very old homes that have specific coverage issues.

These somewhat standardized form variations are the insurance industry’s attempt to meet the needs of most homeowners through a minimum variety of policy forms. The basic forms are standardized to help agents and homeowners understand the general coverages that are in each policy, which can then be somewhat modified by the addition of policy endorsements. If all of your specific insurance needs cannot be fully met by one of the standardized forms, policy endorsements will modify the general form to better suit your situation.

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