What is an HO-1 insurance policy?

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Having a home insurance policy is essential to protecting your investment – ​​and most mortgage lenders require borrowers to insure their homes.

But not all home insurance policies are created equal. Some offer more protection than others. An HO-1 policy is a more basic type of home insurance, while HO-3 and HO-5 policies are more comprehensive.

Here’s what you need to know about HO-1 home insurance policies:

What is an HO-1 font and how does it work?

An HO-1 policy is a very minimal home insurance policy. It provides protection only for the structure of your home – and sometimes the belongings within it – and it’s not widely available from major insurers. According National Association of Insurance Commissioners (NAIC) data.

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What does an HO-1 policy cover?

An HO-1 policy covers damage to your property caused by 10 specifically named perils (events that cause damage). Other types of home insurance policies, especially HO-3s and HO-5s, cover much more risk.

Perils covered under an HO-1 policy include:

  • fire or lightning
  • Storm or hail
  • Blast
  • Volcanic eruption
  • Riot or civil unrest
  • Flight
  • Aircraft damage
  • Vehicle damage
  • Smoke
  • Vandalism or malicious mischief

Good to know: If your home suffers damage from any other type of event, an HO-1 policy probably won’t cover it. Also, HO-1 policies only cover damage to the structure of your home (Coverage A), although some cover damage to personal property inside the home (Coverage C).

Learn more: How much home insurance do I need?

What does an HO-1 policy not cover?

An HO-1 policy excludes many perils. Understanding these limitations is essential before purchasing this type of policy. If any of these uncovered events cause damage to your home, you are fully responsible for covering the repairs out of pocket.

Risks that an HO-1 home insurance policy does not cover include:

  • falling objects
  • Accidental water spill/overflow of water or steam from plumbing, HVAC systems, appliances, or fire sprinkler systems
  • Weight of ice, snow or sleet
  • Freezing plumbing, HVAC, automatic fire sprinkler system or appliances
  • Sudden or accidental tearing, cracking, burning, or bulging of a steam or hot water heating system, HVAC system, or fire sprinkler system
  • Sudden or accidental damage caused by artificially generated electric current
  • Flood
  • Earthquake
  • War
  • nuclear accident
  • Landslide, mudslide or sinkhole
  • Sewer backup
  • Maintenance damage

Keep in mind: You will usually need a separate policy to protect your home from flood or earthquake damage. If you’re in a high-risk flood zone, your mortgage lender may actually require it.

How much does an HO-1 policy cost?

The cost of an HO-1 policy varies depending on a number of factors (more on that later). But in 2019 — the most recent year for which data is available — the average cost of an HO-1 policy was $1,655 per year, according to the NAIC. On homes valued between $300,000 and $399,999, it was $1,960. Meanwhile, on homes between $75,000 and $99,999, it was just $998.

Keep in mind that these are overall averages. Premiums vary widely based on property value, risk exposure and location, so your policy may cost more or less than these averages.

See: How to get home insurance

Factors that affect the cost of an HO-1 policy

Premiums for HO-1 policies, just like premiums for any home insurance policy, are highly dependent on many factors, including:

  • Risk of damage to the house
  • The value of the house
  • house size
  • house age
  • state of the house
  • Local reconstruction costs
  • Your deductible
  • Your insurer

Good to know: Home insurance premiums have risen in recent years due to rising rebuilding costs and supply chain issues caused by the coronavirus pandemic. So it’s even more important to shop around for your font, no matter which type you opt for.

How is an HO-1 font different from other forms of font?

An HO-1 policy is as basic as possible. Most other types of home insurance policies have much broader coverage and even cover things like liability, additional living expenses, and medical expenses.

The HO-3 policy is the most common type of home insurance policy and covers these other areas. Nearly 78% of home insurance policies in the United States in 2019 were HO-3 policies, according to the NAIC.

Here is a breakdown of what is covered by an HO-1 policy compared to other forms of home insurance:

Police form Property type What it covers Best for
HO-1 (basic) Accommodation Limited named risks for structure and content Minimum coverage, if applicable
HO-2 (wide) Accommodation Highest number of named perils for structure and content More coverage than HO-1 but less than HO-3
HO-3 (special) Accommodation Open risks for structure, named risks for content Most owners
HO-4 (wide content) Rental unit Named perils for content Tenants
HO-5 (complete) Highest value house Open risks to structure and personal property Owners who want the most comprehensive coverage
HO-6 (unit owners) Condo or cooperative unit Named perils for content and some structural elements Owners of condos or cooperatives
HO-7 (mobile home) Mobile home Open risks for structure, named risks for personal property Mobile home owners
HO-8 (modified cover) Old houses at risk Limited named risks to structure and personal property Owners who are not eligible for any other coverage

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If you financed your home with a mortgage, your lender will most likely require you to have homeowners insurance, as this protects their investment. Since HO-1 policies offer such minimal coverage, it is unlikely that a lender will accept this type of policy as meeting their requirements.

If your mortgage lender requires homeowners insurance as a stipulation of your financing, you’ll likely need a more comprehensive policy, such as an HO-3 or HO-5. Not only will these policies meet the lender’s requirements, but they will also ensure that your home, family and assets are protected in a number of unforeseen circumstances and emergencies.

Whichever type of policy you choose, it’s important to shop around with different insurance companies. Insurers can vary widely in price, even for the same coverages, so getting quotes from at least three different providers can help you get the best deal and coverage possible for your specific needs.

While you can certainly contact insurance companies individually, using Credible can make the process easier and more efficient. You can compare home insurance quotes from over 40 insurers in minutes.

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Disclaimer: All insurance related services are provided by Young Alfred.

About the Author

Aly J. Yale

Aly J. Yale is a mortgage and real estate authority. His work has been published in Forbes, Fox Business, The Motley Fool, Bankrate, The Balance, etc.

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Justin D. O'Neill