One of the most common misunderstandings among home owners is that all home policies are created equal. There are actually four different classes of home policies you can purchase. The range of coverage for each class varies greatly depending on which one you buy.

The four most common home policies available are the HO1, HO8, HO2, HO3 and HO5. Most states use these classifications, but a few states also use the classifications HOA, HOA+, HOB, and HOC. In addition to the four home owners policies, policies for condo owners (HO6) and renters (HO4) are also described here.

HO1: Basic Named Perils Policy
The HO1 Home Policy is the most basic and simple protection you can have. This policy will only protect you from 10 specific perils. If something happens to your home other than these ten perils, you are not covered. The ten perils are:

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 HO8 is usually $1,000)
10. Volcanic Eruption

The HOA policy is the exact same type of policy as the HO1, and will only protect you, the insured, from the same 10 perils listed above. There is no real difference between the two policies. The classification HOA is most commonly used in Texas.

HO8: Basic Market Value Policy
The HO8 Policy is the most basic and simple protection you can have. This policy will only protect you from the same 10 perils listed above in the HO1 policy. The only real difference between the HO1 and the HO8 is that the HO8 policy will cover your home for market value rather than the cost to replace it. Instead of being a replacement cost policy, most HO8 policies are actual cash value. The HO8 is the worst home insurance coverage available.

HO2: Broad Named Perils Policy
The HO2 Home Policy provides broader coverage than the HO1 policy. It still explicitly lists every peril you are protected against, but the list adds six more perils. This protection covers both your dwelling and your personal property. The sixteen perils are:

1. Fire or Lightning
2. Windstorm or Hail
3. Explosion
4. Riot or Civil Commotion
5. Aircraft
6. Vehicles
7. Smoke
8. Vandalism or Malicious Mischief
9. Theft
10. Volcanic Eruption
11. Falling Objects
12. Weight of Ice, Snow, or Sleet
13. Accidental Discharge or Overflow of Water or Stream
14. Sudden & Accidental Tearing Apart, Cracking, Burning, or Bulging
15. Freezing
16. Sudden & Accidental Damage from Artificially Generated Electric Current

The HOA+ policy is the exact same type of policy as the HO2, and will protect you, the insured, from the same 16 perils listed above. There is no real difference between the two policies. Make sure you are purchasing the HOA+ and not the HOA policy. The classification HOA+ is most commonly used in Texas.

HO3: Basic Open Perils Policy
The HO3 Home Policy is a hybrid of an open perils policy and a named perils policy. This is the most common type of home insurance policy. This policy covers your dwelling for anything and everything that could possibly happen to it other than explicitly excluded events, while your contents are covered for the sixteen perils covered in the HO2 policy. The exclusions to the dwelling protection are listed below.

1. Earth Movement
2. Ordinance or Law (some coverage may be provided in your policy)
3. Water Damage (Sudden & Accidental Water Damage is automatically included)
4. Power Failure
5. Neglect
6. War
7. Nuclear Hazard
8. Intentional Loss
9. Government Action
10. Collapse (some coverage may be provided in your policy)
11. Mold, Fungus, or Wet Rot (some coverage may be provided in your policy)
12. Birds, Vermin, Rodents, Insects
13. Wear & Tear, Deterioration

If something happens to your home that is not specifically listed as one of the above exclusions, then it is covered under an HO3 policy.

The HOB Home Policy is also a hybrid of an open perils policy and a named perils policy. It is virtually the same policy as the HO3, with a few minor differences. Like the HO3, the HOB policy will protect your home for anything and everything minus the exclusions, and will protect your contents for the sixteen perils covered in the HO2 policy.

The only real difference between the HO3 and the HOB is the type of water protection that comes standard with the policy. As you can see from exclusion 3 above, Water Damage is normally excluded from HO3 home owners policies.

Four types of water damage can be endorsed onto your policy.

• Sudden & Accidental Discharge of Water - this is protection from water damage resulting from a pipe bursting.
• Water Backup - this is protection from water damage resulting if there is a backup in a sewer system, and water comes pouring out of your toilets and sinks into the house.
• Foundation Coverage - this is protection to your foundation if it has to be destroyed in order to fix a water problem in or under the foundation. This is typically only an important coverage if you would have to tear up the foundation to get to pipes. A good example of this is a slab foundation.
• Continual & Repeated Seepage - this is protection from water damage resulting from a slow leak in the home, which damages the home over time.

Most HO3 policies include Sudden & Accidental Discharge of Water coverage automatically, but not the rest. Most HOB policies, however, include Sudden & Accidental Discharge of Water, Water Backup, and Foundation Coverage automatically. Some even include Continual & Repeated Seepage. Not all HOB policies are equal, so ask your agent which types of water damage protection is included in your HOB policy. The classification HOB is most commonly used in Texas.

HO5: Full Open Perils Policy
The HO5 Home Policy is full open perils on both the dwelling and the personal property. This means that your home is covered for anything and everything that could possibly happen to it, minus the same exclusions listed above in the HO3 policy. The only difference is the HO5 will cover your contents for open perils as well, while the HO3 covers your contents for the sixteen named perils.

The HOC policy is the exact same policy as the HO5, with the only exception being the possible water protection you can receive. Many HO5 and HOC policies will automatically include all four water protections, so be sure to ask your agent about your companies' specific water protections.

HO4: Renter's Policy
The HO4 policy is very different from the rest of the policy types because there is NO coverage for the Dwelling, Other Structures, or Loss of Use. This policy was designed for those who are renting and have no interest in the existing structure, but want to make certain their belongings are protected. The HO4 Policy comes with the amount of Personal Property, Liability, and Medical Payments to Others that you specify.

Renter Policies are named peril policies. Your contents are protected from the same 16 named perils that are covered in the HO2 policy. They are listed again below for convenience.

1. Fire or Lightning
2. Windstorm or Hail
3. Explosion
4. Riot or Civil Commotion
5. Aircraft
6. Vehicles
7. Smoke
8. Vandalism or Malicious Mischief
9. Theft
10. Volcanic Eruption
11. Falling Objects
12. Weight of Ice, Snow, or Sleet
13. Accidental Discharge or Overflow of Water or Stream
14. Sudden & Accidental Tearing Apart, Cracking, Burning, or Bulging
15. Freezing
16. Sudden & Accidental Damage from Artificially Generated Electric Current

HO6: Condo Policy
The HO6 policy is very unique. Most condo owners are not responsible for any exterior loss that might occur, but they are responsible for the interior walls, floors, and ceilings of their condo, as well as their personal property. Because the condo owner is responsible to repair the entire interior as result of a loss, HO6 insurance policies must have Dwelling coverage.

Because condo owners are indeed owners, HO6 policies also have Loss of Use coverage. The primary difference between a regular home owners policy and the HO6 policy is that condo policies do not have Other Structures coverage. They also typically have a very low coverage amount for the Dwelling, because they aren't responsible for the entire structure.

Condo policies are named peril policies for the dwelling, Personal Property, and Loss of Use. The perils condo owners are protected from are the same 16 perils that apply with the HO2 and the HO4 policies.