HO-3 (aka Homeowners 3, Special Form) is the most commonly purchased policy, which is an open perils policy that covers any direct damage to the house or other structures on the property unless it is specifically excluded. However the coverage for personal property is for named perils only—the same perils listed in an HO-2 policy. Covered losses on realty are insured for full replacement value with no depreciation deduction, although certain restrictions apply.
The HO-5 (aka Homeowners 5, Comprehensive Form) policy is also an open perils policy, but also includes direct damage or loss to personal property. Thus, personal property is covered by an open perils clause rather than the more restricted named perils coverage of HO-2 and HO-3—any direct damage or loss to realty or personal property is covered, unless it is specifically excluded.
The HO-8 (aka Modified Coverage Form) policy is for older homes that have a replacement cost that is much higher than its market value. To prevent moral hazard, insurers will not insure a home for more than what it is worth. The HO-8 policy solves this problem by paying what it would cost to repair or replace damaged property, using common construction materials and methods. HO-8 provides functional replacement, which is cheaper. For instance, plaster walls may be replaced with drywall and hardwood floors could be replaced with plywood. Theft coverage is restricted to $1,000 per occurrence from the main residence only.
The HO-6 (aka Unit-Owners Form) is a modified HO-2 policy specifically designed for owners of condominiums or cooperatives. A condominium or cooperative consists of 2 components for insurance purposes—the building and common areas, and property specific to each unit owner. Thus, this named-perils policy covers certain semi-permanent structures, such as carpeting, wallpaper, built-in appliances, and kitchen cabinets, but it does not cover the structure itself or common areas, since this should be covered by insurance purchased by the condominium association or the cooperative. The policy does provide payment of up to $1,000 for a loss assessment charge by the condominium association or cooperative that is not covered by the insurance on the realty.
The HO-4 (aka Contents Broad Form) is a modified HO-2 policy for renters of rooms, apartments, or houses. This named-perils policy not only covers personal property, both within the rented dwelling and outside, but also includes liability insurance of at least $100,000 for damage to the property or for injuries to other people in the rented dwelling. Coverage is also provided for any alterations to the structure by the renter, but is limited to 10% of the purchased coverage for personal property.