The HO-1 (Basic Form) is one of the standard homeowners insurance policy types. It is the most basic and limited form of coverage available for homeowners insurance and is typically offered by a smaller number of insurance companies due to its limited protection. The HO-1 policy provides coverage for a specific set of perils (or risks), which are explicitly listed in the policy.

Key Features of the HO-1 Policy:

  1. Named Perils:
    • An HO-1 policy is a named peril policy, meaning it only covers the specific perils listed in the policy. If the damage is caused by a peril that is not listed, it will not be covered.
    • The following perils are generally covered under an HO-1 policy:
      • Fire or Lightning
      • Windstorm or Hail
      • Explosion
      • Riot or Civil Commotion
      • Aircraft or Vehicle Damage
      • Smoke
      • Vandalism or Malicious Mischief
      • Theft
      • Volcanic Eruption
  2. Coverage for Dwelling:
    • The dwelling (your home) is covered against damages caused by the listed perils. If your home is damaged or destroyed due to one of the named perils, the insurance will help repair or rebuild it, subject to the policy limits.
  3. Coverage for Personal Property:
    • The HO-1 policy typically offers very limited coverage for personal property (such as furniture, electronics, or clothing). The personal property is also covered against the specific perils listed in the policy.
    • Coverage for personal property is usually at a lower limit compared to dwelling coverage, and the same named perils apply.
  4. Exclusions:
    • Floods and earthquakes are usually excluded from the HO-1 policy, and these may require separate coverage if needed.
    • Wear and tear, maintenance issues, and damage from neglect are not covered by an HO-1 policy.
    • Mold and pest-related damage (e.g., termites) are typically excluded.
  5. Liability Coverage:
    • The HO-1 form does not automatically include liability coverage. This means that if someone is injured on your property or if you cause damage to someone else’s property, you would have to pay out of pocket for legal fees or damages unless you add liability coverage separately.
  6. Loss of Use Coverage:
    • Loss of Use or Additional Living Expenses (ALE) coverage is typically not included in an HO-1 policy. This means that if your home is damaged and you need to live elsewhere temporarily while it’s being repaired, you would have to cover the cost of temporary housing on your own.
  7. Policy Limits:
    • Coverage limits for an HO-1 policy are generally lower than more comprehensive policies like HO-3 or HO-5. This means you may not have enough coverage to fully rebuild your home or replace all your personal property in the event of a loss, especially if the dwelling is significantly damaged.

HO-1 vs. Other Homeowners Insurance Forms:

The HO-1 is considered the most basic and limited type of homeowners insurance. It is generally outdated and rarely offered by insurers anymore, as more comprehensive policies, such as HO-3, have become the standard in the industry. Here’s how it compares to other types of policies:

  • HO-3 (Special Form): This is the most common homeowners insurance policy, offering broader coverage. Unlike the HO-1, the HO-3 is an open peril policy for the dwelling (meaning it covers all perils except those specifically excluded), and it provides more extensive coverage for personal property.
  • HO-5 (Comprehensive Form): This is the most comprehensive homeowners policy, providing open peril coverage for both the dwelling and personal property, and often with higher limits and fewer exclusions.
  • HO-2 (Broad Form): This policy offers named peril coverage for the dwelling and personal property but is more extensive than the HO-1, as it includes additional perils like falling objects and weight of ice or snow.

Why Would Someone Choose HO-1?

  • Budget-Friendly: The HO-1 policy is often cheaper than more comprehensive policies, making it appealing for homeowners who are looking for the most basic level of protection and want to save on premium costs.
  • Older Homes: Homeowners with older homes or homes in lower-risk areas may opt for an HO-1 policy because the costs are typically lower, and they may not require extensive coverage.
  • Minimalist Coverage: Some individuals may prefer the bare minimum coverage and may not have many valuables or high repair/replacement needs.

Limitations of HO-1:

  • Limited Coverage: It only covers a narrow range of perils, and it does not offer the broad, comprehensive protection available with more modern policies like HO-3.
  • Exclusions: It excludes many important types of damage, like flooding, earthquakes, and mold, and it does not include liability or loss of use coverage.
  • Not Commonly Available: Since it’s outdated, many insurance companies no longer offer the HO-1, and it may be difficult to find or obtain for new policyholders.

Conclusion:

The HO-1 (Basic Form) is the most basic type of homeowners insurance available, covering a limited set of risks to your home and personal property. While it may be more affordable, it offers minimal protection compared to more common policies like HO-2, HO-3, or HO-5, which provide broader coverage and additional protections such as liability and loss of use coverage. If you’re seeking comprehensive coverage for your home, a more extensive policy like HO-3 or HO-5 is generally recommended, as it will offer greater peace of mind and financial protection.