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The HO1 home insurance policy is usually viewed as the most basic policy. It is also called – a perils insurance policy. It provides coverage against damage caused by the following:

  1. Fire or Lightning
  2. Windstorm or Hail
  3. Explosion
  4. Riot or Civil Commotion
  5. Aircraft
  6. Vehicles(unless caused by the insured)
  7. Smoke
  8. Vandalism or Malicious Mischief
  9. Theft (Limit of liability on HO1 is usually $1,000)
  10. Volcanic Eruption
  11. Glass breakage

More often than not, consumers buying this policy are recommended to opt for the Replacement Cost policy, rather than the Actual Cash Value one. The former ensures full coverage minus the deductible, whereas the latter offers coverage of home replacement minus the depreciation value.Bear in mind, the three important perils that a HO1 policy does not cover for are – damage from water, falling objects and earthquakes.

The HO2 policy is also known as the Broad Form Homeowner Policy. In addition to the perils listed for HO1, this one also provides coverage for damage from:

  1. Falling objects
  2. Weight of ice, snow, and sleet
  3. Accidental discharge or overflow of water or steam
  4. Sudden and accidental tearing apart, cracking, burning or bulging
  5. Freezing
  6. Sudden and accidental damage from artificially generated electrical current

The HO2 policy serves more as a Replacement Cost policy rather than being an Actual Cash Value one. Although this policy offers more in-depth coverage in comparison to the HO1 policy, it still leaves out damage from water backup, foundation or slow leaks. However, you can avail the additional benefits mentioned above at an added cost.

The main difference between  HO2 policy and HO3 or HO5 is that the latter two are for open perils, in other words – coverage is provided against almost all claims except for things that have been explicitly omitted.

The HO3 policy, also known as a Hybrid Policy, is the most common one across the United States. As mentioned above, it is an open perils policy – which means that it provides coverage against all kinds of damage except the ones explicitly mentioned in the insurance agreement. The perils left out of this coverage are:

  1. Earth movement
  2. Ordinance/Law
  3. Water damage
  4. Power failure
  5. Neglect
  6. War
  7. Nuclear hazard
  8. Intentional loss
  9. Government action
  10. Collapse
  11. Theft to a dwelling under construction
  12. Vandalism/Malicious mischief (only if vacant more than 60 days)
  13. Mold, fungus, wet rot
  14. Wear/tear deterioration
  15. Mechanical breakdown
  16. Smog, rust, corrosion
  17. Smoke from agricultural smudging and industrial operations
  18. Discharge, dispersal, seepage of pollutants
  19. Settling, shrinking, bulging, expanding
  20. Birds, vermin, rodents, insects
  21. Animals owned by insured

However, the one clause to be wary against in this policy is -- that protection is provided only for property in your home and not for the home itself.

The HO4 policy is usually reserved for renters. It is once again a named-perils policy, in other words it provides coverage for the 17 perils listed under HO2. Like HO3, HO4 also provides coverage against only personal property and not for the exterior dwelling. This is primarily why HO4 is opted by most renters, whether they be living in townhomes, condos or any such property. One additional feature of this policy is that it does not provide coverage for Loss of Use. This comes into play, when the claimant has to pay for hotel charges for the duration of time that repair work is being done in their home.

The main distinction between a HO3 policy and a HO5 is that the former provides coverage only for the property of your home and not its structure. A HO5 policy protects you against damage to both, the structure and property of your home – including your furniture, clothes and appliances. However, its one limitation is that it does not cover for damage from earthquakes or floods. Additionally, this policy is available only for homeowners who inhabit homes that were built in the last 30 years, or those that have been renovated within the last 40 years.

Next up, the HO6 insurance policy is also known as a condominium insurance policy or townhome insurance policy, since it is primarily used for insuring these two types of properties. It covers protection to damages to the interior space, including – walls, floor, ceiling, and property, but the exterior is not usually covered for in this policy. It also includes liability coverage, which means that the provider will take on the financial burden of paying for legal and medical expenses for people who have been injured on your property due to some negligence attributable to you.

Gavop calculated the cheapest providers across the states of New Hampshire, Delaware, Alaska, Hawaii, Louisiana and Texas for a few of the policies, to give consumers an idea about the price range for the homeowner policy they choose to buy.


Cheapest ProvidersPremium
DB Insurance Company$279
Universal Property & Casualty Insurance Company$317
American Pacific Insurance Company$324
Island Premier Insurance Company, Ltd.$357
Farmers Insurance Exchange, Inc$361


Cheapest ProvidersPremium
The Providence Mutual Fire Insurance Company$84
Vermont Mutual Insurance Company$100
Safeco Insurance Company$113
The United Services Automobile Association$126
USAA Casualty Insurance Company$132


Cheapest ProvidersPremium
Patriot Insurance Company$110
MMG Insurance Company$150
Phenix Mutual Fire Insurance Company$174
The United Services Automobile Association$177
York Insurance Company of ME$185

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