Hollay Ghadery Last Updated On: June 27, 2023

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HO-1 Home Insurance Explained

Acronyms make our lives easier. We don’t just laugh, we LOL and we don’t just get there, we get there ASAP.

But what exactly is HO-1 insurance? Car, home, or health insurance? 

Read on, and we’ll uncover the mystery surrounding HO-1 insurance, so you can decide if it’s right for you.

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What Is HO-1 Insurance?

Let’s cut to the chase: HO-1 insurance, or “basic form home insurance”, protects your physical home and belongings from 10 listed perils. This type of insurance offers limited or less comprehensive protection than other home insurance products.

For instance, traditional homeowners insurance doesn’t just cover the physical structure of your home; it also can pay for loss of use (alternative accommodations) and medical payments (medical expenses if someone is injured on your property). HO-1 insurance, on the other hand, covers just the dwelling.

As of 2019, only 1.62% of families had HO-1 insurance plans. Because this product isn’t the first choice for most homeowners, not all insurance companies offer HO-1 insurance.

The final thing to know about HO-1 policies is it’s a type of actual cash value policy, which means that even if a named peril damages your home, the payout amount depreciates. For example, if your roof is 10 years old, your payout check would be a brand-new roof minus 10 years of depreciation and wear and tear.

Home Insurance Varieties: HO-1 to HO-6

HO-1 is the basic form of home insurance, whereas HO-2, HO-3, and HO-5 offer more comprehensive house insurance coverage. They all protect your home from more than just 10 named perils.

Here’s a quick reference guide on each home insurance policy.

HO-2: Broad Form Home Insurance

Rather than offering your home financial protection against 10 named perils, HO-2 covers 16 perils.

HO-2 Insurance Named Perils
Lightning or FireExplosionsDamage Caused by CarsFalling Objects
Hail or WindstormRiots or Civil CommotionTheftVolcanic Eruptions
Damage Caused by AircraftSmoke DamageVandalismDamage From Weight of Snow, Sleet, or Ice
Water Damage From Plumbing, Heating, or A/C OverflowWater Heater Cracking, Overheating, BurningDamage From Electrical CurrentFrozen Pipe Damage

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HO-3: Special Form Home Insurance

HO-3 home insurance is more commonly purchased than HO-1 or HO-2 insurance because it covers more than just the structure of your house.

This insurance covers open perils, meaning any hazard except anything expressly stated in the policy as not included. For example, your policy may cover everything except frozen pipes.

HO-3 insurance protects your home, personal property, any structures on-site (such as a shed), liability coverage, additional living expenses, and medical payments to anyone injured on your property.

HO-4: Renter's Home Insurance

If you’re renting a home or an apartment, HO-4 offers liability and personal property protection.

HO-5: Comprehensive Home Insurance

You can simplify your insurance with HO-5 by removing the burden of proof that your home was damaged by a named peril, thereby fast-tracking insurance claims. HO-5 insurance gives you all the features of HO-3 insurance (open peril protection, coverage on your home, personal property, medical, etc.).

As well, your payouts are either actual cash value (minus any depreciation) or replacement costs (current market value replacement), depending on your policy.

HO-6: Condo Insurance Policy

If you live in a condo, HO-6 insurance was made for you as it protects the structure of your condo and your personal property.

HO-1 Insurance Coverage

HO-1 insurance protects your physical home from damages caused by listed perils. So what are the 10 named perils that your HO-1 plan will cover?

HO-1 Insurance Named Perils
Fire or Smoke Explosions
Lightning Hail and Windstorms
Theft Vandalism
Damage From Vehicles Damage From Vehicles
Riots or Civil Commotion Volcanic Eruptions

What HO-1 Home Insurance Doesn’t Cover

The better question isn’t what your HO-1 insurance will cover; it’s what it won’t cover! In all things in life, you get what you pay for, and HO-1 home insurance is no different.

Low premiums mean limited coverage and low coverage limits. HO-1 insurance will not cover any of the following:

Additional Perils & Exclusions

HO-1 insurance only covers 10 named perils, while HO-2 plans cover an additional six named perils. HO-1 plans won’t cover:
  • Falling Objects
  • Weight of Snow, Sleet, or Ice
  • Water Damage From Plumbing, Heating, or A/C Overflow
  • Water Heater Cracking, Overheating, Burning
  • Damage From Electrical Current
  • Frozen Pipe Damage
Additionally, HO-5 home insurance or other comprehensive policies don’t usually cover these additional perils:
  • Hurricane
  • Flood
  • Vacant Dwelling Vandalism
  • Mold (some plans allow you to add mold coverage)
  • Wear and Tear
  • Pet Damage
  • Earthquakes (you may be able to add supplemental earthquake coverage)
  • Building Code Enforcement
  • Intentional Acts
  • Government Acts
  • Neglect

Liability Insurance

If someone is injured on your property, if you don’t have liability coverage and they sue you, you’re on the hook for any court costs.

Personal Property

Suppose your home and personal property—clothing, furniture, belongings—are damaged or destroyed by a named peril. HO-1 insurance won’t pay to repair or replace your personal property.  

Medical Payments

When someone gets hurt at your home, medical payments will pay for their medical bills. However, HO-1 insurance doesn’t include medical payments.

Additional Living Expenses

Suppose something happened to your house and you needed to temporarily relocate to a hotel or other accommodations while it’s being repaired. In that case, additional living expenses will pick up the tab. If this feature sounds attractive, consider a more comprehensive home insurance like HO-5.

Read more about what homeowners insurance doesn’t cover here.

Who Should Consider HO-1 Insurance?

Most homeowners prefer a home insurance policy with more features than just protecting the physical structure of their house. So, who benefits from HO-1 insurance?

Because HO-1 protects against named perils only—without additional features like liability coverage—many states don’t allow insurers to offer this product. Furthermore, to get a mortgage on a house, most lending requirements mandate you obtain a more substantial home insurance, like HO-3 or HO-5. 

You should only consider taking out an HO-1 policy if you’re insuring an older home that doesn’t have much in the way of personal belongings inside. For instance, if your secondary property is an older house that you don’t live in, HO-1 coverage might be sufficient.

How Much Is HO-1 Insurance?

There is no set cost for HO-1 as it depends on the insurer and the variables they use to calculate the rates. However, you can expect that HO-1 policies are more affordable than other related home insurances like HO-5. These are some of the variables used to calculate your HO-1 home insurance premiums:
  • The state
  • Your home’s size
  • Your home’s condition
  • The deductible and coverage limit you select
  • Your claim history
If you’re ready to get a quote for HO-1 insurance, click here for access to fast, free quotes.

Should You Get HO-1 Insurance?

As a homeowner and especially if you have a family, HO-1 insurance shouldn’t be your top choice for home insurance. Yes, it comes with affordable premiums, but at what future cost? If a peril damages your home (named or not), you shouldn’t have to worry about footing the bill for repairs. The point of home insurance is to shelter you from financial stress if anything happens.

Your home insurance policy cannot protect you if you pick a policy that offers little protection. So, unless you have a secondary property that you want to protect from vandals, you may want to look into a home insurance plan that is more comprehensive, like HO-3 or HO-5 plans. Find more tips for shopping for a home insurance policy here.

And finally, before picking out home insurance, be sure to shop around for the best home insurance coverage at the right price. It always pays to explore all your options before you sign on the dotted line. So, if you’re ready to start insurance shopping, get access to free quotes here.

Hollay Ghadery Hollay Ghadery is a writer and editor who is passionate about financial literacy as a means to personal fulfillment. Hollay has over 18 years of experience creating content about a range of topics related to personal finance, including insurance, investing, banking, and credit cards. When Hollay isn't writing, she's spending time with her four children, two dogs, and three goats.

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