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What is an HO-1 insurance policy?

Fact-checked with HomeInsurance.com

If you own a home, having a homeowners insurance policy to protect your investment is important. There are several different policies you can choose from, one of which is HO-1 insurance. This type of insurance is the most basic form of home insurance you can buy. HO-1 policies offer minimal protection, but for some homeowners, it’s the only coverage they can get. 

What is HO-1 insurance?

HO-1 insurance is the most bare bones home insurance policy that providers offer. It includes only dwelling coverage, which protects the physical structure of your home. HO-1 insurance does not include liability, personal property, medical payments or additional living expenses coverage.

Property insurance companies offer a number of other insurance policies that are more comprehensive and include more coverage. For instance, HO-2 insurance covers high-risk homes, HO-4 insurance covers rental properties, HO-5 insurance covers high-value homes, HO-6 insurance covers condos and HO-8 insurance covers older or historic homes. The most popular home insurance policy is HO-3, which almost every home insurance company offers.

Who needs HO-1 insurance?

HO-1 insurance is not a popular insurance policy, and it’s not a good option for most homeowners. HO-1 insurance offers very little coverage, which means homeowners have to pay out-of-pocket for things like personal property losses or legal expenses. 

Only a few insurance companies today sell HO-1 policies. If you qualify for HO-1 insurance, it’s usually because you or your home carry some level of risk. For example, if you’ve filed dozens of home insurance claims for negligent behavior, the insurance company might only offer you an HO-1 policy. People who own very old homes in poor condition might also qualify for HO-1 insurance.

Another thing to know about HO-1 insurance is that most mortgage lenders will not approve a loan with this type of policy. Having HO-1 insurance means the homeowner assumes a significant amount of risk, which puts the mortgage company in jeopardy. If you have a mortgage, we recommend considering another policy.

What does HO-1 insurance cover?

Dwelling

HO-1 insurance only covers your dwelling, or the physical structure of your home. It also covers attached structures, like a garage or porch. HO-1 insurance covers your home from named perils, which are listed in your policy. But unlike most named peril policies which include 16 covered perils, HO-1 insurance only covers your home from 10 perils.

What does HO-1 insurance not cover?

Personal property

HO-1 insurance does not cover your personal property. That means any loss that damages or destroys the personal belongings inside or outside your home are not covered by insurance. The homeowner is responsible for repairing or replacing any items after a loss.

Liability

Liability insurance, which covers a homeowner’s legal expenses, is not included with HO-1 insurance. If a guest fell down the stairs, or a delivery driver slipped on your icy driveway, you would be responsible for covering your legal costs in full if they sued you.

Medical payments

Another thing HO-1 insurance does not cover is medical expenses. If a guest injures themselves on your property, medical payments coverage typically helps pay for their medical expenses. But if you have HO-1 insurance, you would have to help pay for the cost out-of-pocket, or risk a lawsuit.

Additional living expenses

If your home is damaged in a covered peril and you have to temporarily relocate, additional living expenses coverage reimburses you for things like hotel, food, and parking costs. If you have an HO-1 insurance policy, this type of coverage is not included.

How much HO-1 insurance do I need?

If you qualify for HO-1 insurance, you’ll need to determine how much coverage to purchase. Because HO-1 insurance only covers your dwelling, it’s easy to figure out how much coverage you need as it primarily accounts for the cost to rebuild your home.

You can calculate your home’s replacement cost by finding the building cost per-square-foot in your neighborhood, adding the cost of labor and materials, and adding the cost of a new roof, doors, floor, dry wall, etc. You can get these figures from a local construction or real estate company. You should have enough dwelling insurance to cover the full cost of a rebuild.

Other types of insurance forms

As you can tell, HO-1 insurance isn’t the best option for home insurance, especially if you qualify for a policy with more coverage. Other common types of home insurance policies include:

  • HO-2 insurance: HO-2 insurance covers your home and belongings on a named peril basis.
  • HO-3 insurance: HO-3 insurance is the most popular home insurance policy, which covers your home on an open peril basis, and your belongings on a named peril basis.
  • HO-4 insurance: HO-4 insurance covers rental units, and includes personal property, liability, and additional living expenses coverage.
  • HO-5 insurance: HO-5 insurance covers your home and belongings on an open peril basis.
  • HO-6 insurance: HO-6 insurance covers condos, including your individual unit, personal property, liability, medical payments, additional living expenses and loss assessment.
  • HO-8 insurance: HO-8 insurance is specifically for older homes, especially ones that are historical or architecturally significant. It includes dwelling, personal property, liability, medical payments and additional living expenses coverage.

The takeaway

  • HO-1 insurance is the most basic form of home insurance on the market.
  • It’s very difficult to get an HO-1 insurance policy, and it’s only available for high-risk homes or homeowners.
  • HO-1 insurance leaves homeowners with gaps in coverage, so most mortgage providers won’t approve a home with this type of coverage.

Most homeowners don’t qualify for HO-1 insurance, because it’s reserved for homes or homeowners that are risky to insure. This type of insurance only covers your dwelling, and doesn’t include important coverages like liability and personal property insurance. If you qualify for a standard HO-3 insurance policy, it will offer better protection and significantly less risk.

Elizabeth Rivelli

Elizabeth is an insurance writer for coverage.com, where she covers insurance providers and reviews policies to help consumers find comprehensive and affordable coverage for every area of their life. She has more than three years of writing experience for top online insurance and finance publications.

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