What Types of Damage Does Homeowners’ Insurance Cover?

Insurance Ranked - Updated January 9, 2023
What Types of Damage Does Homeowners’ Insurance Cover?

What Types of Damage Does Homeowners Insurance Cover?

According to the Insurance Information Institute (III), about one in 20 homes experiences an insurance loss each year. A majority of these incidents are due to wind, hail, or water damage. Data from 2016 to 2020 shows that the average cost of these weather-related claims was approximately $11,600.

Home damage is more common than you think, and even minor issues can lead to a financial setback if you don’t have the right insurance coverage.

When you start shopping for insurance, you’ll realize that there is a huge range of policy options, and the differences between them can sometimes be confusing.

Here is a look at the different types of homeowners insurance and details of each that can help you decide which one is right for your needs.

Types of Homeowners Insurance

All homeowners insurance policies protect against common disasters, but some do not cover specific types of damage. Based on your coverage, some insurers may only offer cash value for property, while others cover complete post-disaster renovations. Policies can also treat possessions inside your home in different ways depending on their value and whether they get specifically mentioned in the terms of your insurance agreement.

These nuances can be very confusing. Luckily, there are specific grades of homeowners insurance, each of which offers a particular type of coverage. You can look at the different categories to help you decide how much homeowners insurance you need.

Here is a look at the details of each of the eight homeowners insurance categories.


HO-1 Homeowners Insurance

HO-1 policies provide the most basic protections for your property. With this coverage, you will be able to repair your home if it is damaged by one of the events specifically listed by the insurer. You will get a payout for fire, storm damage, and theft. Less common occurrences, like a vehicle crashing into your home or a rioter breaking your windows, are also usually covered. HO-1 coverage does not protect possessions, and it won’t pay for accommodations while your home is getting repaired.

HO-2 Homeowners Insurance

HO-2 is known as “broad form” insurance because it covers more than the basics. In addition to all the HO-1 disasters, it pays for water damage, burst pipes, electrical malfunctions, and some kinds of foundation damage. The insurer lists all the perils covered on the policy.

HO-2 policies provide limited coverage for your belongings, and they offer some support for you to live elsewhere while your home is repaired. The amount you receive for property and temporary relocation is typically capped.

HO-3 Homeowners Insurance

HO-3 policies (also known as “special form” policies) are the most common type of coverage. The important difference in this category is that policies cover all types of damage except for events specifically listed as exclusions.

HO-3 insurance covers the full replacement cost for your property. This means they will pay all the expenses to return your home to its pre-damaged state and give you a place to stay during repairs, if necessary.

Your possessions will also be covered, but only for their cash value and only for perils specifically listed on the policy. Though this coverage is enough for most people, you may find it limited if you have high-value items in your home.

HO-4 Homeowners Insurance

An HO-4 policy is completely different from the first three categories. It is usually referred to as “renters insurance.” It covers the replacement cost of your possessions, and it can also provide a place to stay if your rented home is unlivable and needs repair. However, an HO-4 policy does not cover structures, so it only works if you rent.

The coverage for possessions extends to all the perils explicitly listed in the policy, which should include theft, fire, storms, and other common disasters.

HO-5 Homeowners Insurance

HO-5 policies offer comprehensive coverage for homeowners. For many insurance companies, this is the highest level of protection you can get for a single-family home. They cover both your home and possessions for all perils except those that are explicitly listed as exclusions. Unlike HO-3 policies, this coverage pays the full replacement cost for your belongings instead of giving you cash value.

HO-6 Homeowners Insurance

HO-6 policies are for people who live in a multi-unit structure, such as a condo. When you purchase a condo or space in a co-op, you typically pay homeowners association (HOA) fees, which cover the insurance premiums for the building itself. HO-6 policies protect everything not included in the HOA insurance.

In addition to personal property, liability, and temporary relocation costs, the HO-6 insurance may cover the interior of your condo, such as the walls, floor, and ceiling. This could be important for issues like mold, burst pipes, or storm damage that reaches the interior of your condo.

HO-7 Homeowners Insurance

HO-7 policies provide basic homeowners coverage, similar to an HO-3 policy. However, this insurance is only available for mobile homes. In addition to mobile homes and trailers, these policies often work for modular and park model homes.

HO-7 policies are only in effect when the home is stationary. The coverage is not active while it is on the road, even if you are only moving a short distance from one location to another.

HO-8 Homeowners Insurance

HO-8 policies are known as modified coverage forms. They are for properties that have a higher-than-normal risk of damage. They are also often the only option for homes that are older and more difficult to repair. For example, an insurer can use this policy type when replacement costs are much higher than the cash value of the home.

HO-8 options offer the same limited coverage as HO-1 policies. In other words, the insurer will pay the cash value of the damaged property, but they won’t be involved in making repairs. In this way, the insurer can limit their risk while still providing some coverage.

Does Homeowners Insurance Cover Tree Root Foundation Damage?

Homeowners insurance typically covers sudden disasters and unforeseen damage. Each policy will mention exclusions that are not covered, and neglect is often on the list. Foundation damage due to tree roots often falls into this category. However, if the same tree suddenly falls on your house as the result of a storm, it qualifies as a sudden event, and you will get compensation for the damage from the insurer.

Does Home Insurance Cover Fire Damage?

All homeowners policies provide at least some coverage for fire damage. The payouts can vary significantly depending on your policy, but you’ll at least get the cash value for your dwelling if it’s destroyed by fire. If you have an HO-2 or higher policy, you’ll likewise get at least cash value compensation for your possessions, too.

There may be some policy differences or exclusions if you live in an area where wildfires are common. If you live in such a place, you should confirm wildfire-related coverage when buying your policy.

Does Home Insurance Cover Water Damage?

Most insurance policies cover water damage from unexpected and sudden events, such as a burst pipe. You may also be covered if there’s damage due to freezing, such as frozen pipes.

There are quite a few catches to water damage coverage. For example, most policies do not cover flooding, so you need to purchase extra coverage if you want to be truly prepared for a disaster. Also, external flooding due to neglect, such as a cracked foundation, won’t be covered, and neither will water damage due to backed-up sewer pipes.

Does Home Insurance Cover Wind Damage?

All homeowners insurance policies cover wind damage, though there could be some limitations. For example, in some areas, hurricanes are among the policy exclusions, so you would need additional hurricane insurance to cover wind damage related to these strong storms.

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