What Is HO1 Insurance and What Does It Cover?

An HO1 homeowners insurance policy is a foundational type of property coverage for owner-occupied dwellings. It uses a “named perils” approach, meaning it covers only damages from events explicitly listed in the policy. This policy is a basic form of insurance, offering a limited scope of coverage.

Covered Perils

An HO1 policy covers a specific set of perils. These commonly include damage from fire or lightning, and protection against windstorms or hail.

Explosions, riots or civil commotions, and damage from aircraft or vehicles are also covered. Smoke damage, vandalism or malicious mischief, theft of personal property, and damage from volcanic eruptions are standard inclusions.

Common Exclusions

Despite covering specific perils, an HO1 policy has significant limitations regarding what it does not cover. Damages from natural disasters like floods and earthquakes are almost universally excluded from this basic policy. Similarly, losses stemming from events such as landslides and mudslides are typically not covered, leaving homeowners exposed to these geological risks.

An HO1 policy generally excludes damage resulting from war, nuclear hazard, and power failure. Issues arising from neglect or intentional loss caused by the homeowner are also not covered. Governmental actions, such as property seizure or demolition, are typically excluded. Basic maintenance issues and gradual deterioration are also outside the scope of an HO1 policy, requiring homeowners to bear the cost of routine upkeep and wear and tear.

Limited Availability and Common Alternatives

HO1 policies are rarely sold or available in the market today due to their extremely limited scope of coverage. The basic protection offered by an HO1 policy often proves insufficient for the comprehensive needs of most homeowners, leaving them vulnerable to numerous common risks. Insurers and mortgage lenders frequently require broader coverage than an HO1 policy provides, making it an impractical choice for many.

As a result, more comprehensive homeowners insurance policies have largely replaced HO1. The HO3 policy, known as a “special form” policy, is a common alternative. It offers “open perils” coverage for the dwelling, meaning it covers all causes of loss unless specifically excluded, while personal property is covered on a named perils basis.

Another increasingly popular option is the HO5 policy, often called a “comprehensive form,” which provides “open perils” coverage for both the dwelling and personal property, offering the broadest protection available. These alternatives provide significantly more extensive coverage, aligning better with the financial protection homeowners typically seek.