What's an HO1 Form?
HO-1 policy, also called the basic form, is bare bones homeowners insurance. It lists the specific perils, or events, your insurance provider covers. If a peril is not explicitly listed in the policy, it is not covered by HO-1.
What Do Homeowners Need to Know about HO-1?
First, it helps to know that insurance agents write policies on forms. These standardized forms were designed by industry organizations to be used by multiple insurance providers. The provisions on the forms remain essentially the same from insurer to insurer.
Each form addresses a different situation and set of risks. HO-1 provides coverage for an owner-occupied, standalone home and its contents. It is a named-peril policy, which means it only covers the 10 perils listed in the policy:
- Fire or lightning.
- Hail or windstorms
- Riots or civil commotion
- Damage from aircrafts
- Damage from vehicles
- Malicious mischief or vandalism
- Volcanic eruptions
That list may seem comprehensive, but some important risks are missing. For instance, HO-1 policies do not cover:
- Falling objects
These events are more common than you may think, plus they can cause significant and costly damage.
Additionally, some HO-1 policies do not cover your personal property even if it’s damaged by a named peril. In that case, homeowners may want to buy a separate policy for the contents of their home.
These limitations make HO-1 policies unpopular. Homeowners can usually afford more comprehensive coverage on other forms, and that’s the kind of insurance mortgage lenders typically want you to have. In fact, most states have discontinued HO-1 policies.
How Do I Know If I Have an HO1 Policy?
HO-1 policies are rare, so chances are you don’t have one. But if you’re concerned, you can take a look at your policy. It may have the phrase “Basic Form 1” written on the first page. If it doesn’t, look for a section called “Covered Losses” or “Perils Insured Against.” The language in that section explains that your insurance provider covers “direct physical loss to property” when it’s “caused by a peril listed below.”
What Should I Do If I Have an HO-1 Policy?
You may need to look into supplemental insurance if you have an HO-1 policy. This can come in the form of endorsements to your current coverage or standalone policies for:
- Flood. You can get flood insurance from the National Flood Insurance Program or through a private insurer (like Kin!).
- Earthquake. Many insurance carriers offer an earthquake option on their home insurance policies for an extra cost.
- Personal property. You can buy a policy specifically for the contents of your house or add a rider to your HO-1. A rider adds to the overall cost of your home insurance.
However, your better option may be to find an open-perils policy. Plenty of insurers offer affordable open-perils coverage on the HO-3 form, including Kin. Even better? HO-3 policies generally include personal property and personal liability coverage. And you don’t have to wait for your policy term to end before you shop around. You can switch home insurance carriers at any time.