Most Commonly Purchased Homeowners Insurance: What You Need to Know

If you look at what type of homeowners insurance most people have stuck in their kitchen drawer, it’s almost always the HO-3 policy. This isn’t some marketing spin—it’s straight up the top-seller in the U.S. for single-family homes. Why? Because it’s the one that hits the sweet spot between solid coverage and not totally killing your budget.

Think of the HO-3 as the everyday jeans of home insurance. It’s not the fanciest, and it’s not bare-bones either. Most mortgage lenders even require it because it checks off boxes for both property protection and liability. If you’ve just bought a house or you’re still daydreaming about one, this is the policy type you’ll probably end up with.

• Homeowners Insurance Types: What’s Out There?
• Why the HO-3 Policy Dominates the Market
• What Does an HO-3 Policy Actually Cover?
• Smart Ways to Buy the Right Home Insurance

Homeowners Insurance Types: What’s Out There?

It seems like there’s a different kind of homeowners insurance for every style of house and owner out there. The thing is, not all policies are built the same—so knowing the options really matters if you don't want to get stuck with something that doesn't fit your life. You’ll run into a handful of main types, each designed for specific needs and situations.

• HO-3 Policy (Special Form): This is the most common policy, hands down, for regular single-family homeowners. It covers your house for pretty much anything except what the policy lists as exclusions. Personal stuff inside is usually protected from specific risks like fire or theft.
• HO-1 Policy (Basic Form): You won’t see these much—they’re super bare-bones and only cover a short list of risks (like fire, vandalism, and a couple more). Most people skip this since it doesn’t do enough.
• HO-2 Policy (Broad Form): A step up from HO-1. It covers a few more risks, but not as much flexibility as an HO-3.
• HO-4 Policy (Renters Insurance): If you rent, this one is made for you. It covers your stuff and has liability protection, but not the building itself (landlord handles that).
• HO-5 Policy (Comprehensive Form): This one's even broader than HO-3, covering more risks for both your house and stuff. Usually comes with a higher price tag and is used for newer or pricier homes.
• HO-6 Policy (Condo Insurance): For condo owners, this policy covers the inside of your unit and your belongings.
• HO-7 Policy (Mobile Home Insurance): All about mobile or manufactured homes, instead of traditional houses.
• HO-8 Policy (Older Home Insurance): Built for really old homes with unique features that are tougher or pricier to replace.

Here’s a quick look at how these main types stack up:

So if you’re after the policy most folks buy, aim for the homeowners insurance called HO-3. But if your home isn’t the typical house, there are other options made just for you.

Why the HO-3 Policy Dominates the Market

Out of all the options for homeowners insurance, the HO-3 policy easily takes the crown in the U.S.—and it's not by accident. Over 75% of home insurance policies sold in America use this format because it’s straightforward, fairly priced, and works for the average homeowner. Lenders also insist on it for most mortgages, so millions of people just end up getting one from the get-go.

Here’s what really makes the HO-3 a runaway favorite:

• Flexible coverage: It covers your house for almost any kind of sudden, accidental damage. That means stuff like fire, storms, theft, and even some burst pipes, unless the threat is specifically excluded.
• Personal property coverage: This policy also helps with your stuff, like furniture, clothes, and electronics, without you jumping through hoops.
• Liability baked in: HO-3 doesn’t just stop at your house. If someone slips in your driveway or gets bit by your dog, you’re likely covered up to your policy’s limit.
• Required by banks: Most banks flat-out require this level of home coverage before closing your loan, so it’s kind of a built-in go-to.

It’s not that HO-3 policies are perfect, but they balance cost and protection without crushing your budget or leaving big blind spots. Other policies (like HO-1 or HO-2) usually don’t cover enough. The fancier HO-5 is more expensive and covers more than most people need. So for typical homes and families, the HO-3 is the obvious pick. That’s why year after year, it stays at the top of the heap.

What Does an HO-3 Policy Actually Cover?

The HO-3 policy—the workhorse of homeowners insurance—is popular for a reason. It’s what most folks have because it covers way more than the bare minimum, but it doesn’t make you pay for weird extras most people don’t use. Still, plenty of people have trouble figuring out what’s in and what’s out, so let’s clear that up.

Here’s the deal: HO-3 is known as an "open perils" policy for the structure of your house. That means your house is covered against almost anything, unless the policy straight up says it isn’t. Common stuff like fire, theft, windstorms, hail, even something like a tree falling on your roof—all covered. But there’s a catch: the "named perils" list for what’s inside your home. Your belongings (like furniture, electronics, and clothes) have a set list of things they’re protected against. If it’s not on that list, it’s not covered.

• Dwelling coverage: Covers the structure itself for everything except stuff clearly excluded (like earthquakes and floods).
• Personal property: Covers your stuff against about 16 common risks, including fire, theft, and vandalism—but not against things like slow leaks or typical wear and tear.
• Liability: Pays if someone gets hurt at your place and sues you.
• Additional living expenses: Chips in for hotel bills and takeout if your home gets wrecked and you can't live there for a while.

Some things HO-3 just doesn't touch, no matter what. These are usually highlighted in the exclusions: floods, earthquakes, power failure, and poor maintenance. If you want flood or earthquake coverage, you've got to buy it separately (which most people in risk zones do).

One useful tip: If you own pricey jewelry, collectibles, or fancy electronics, standard HO-3 coverage usually won’t cover the full replacement value if they’re stolen or damaged. You’ll want to add “scheduled personal property” coverage for those.

Dive into your policy’s fine print so you know exactly what you’re getting—no one wants a nasty surprise after an accident. Most companies offer quick online quote tools now so you can double-check what’s covered. Don’t just assume you’re set until you’ve read through your coverage breakdown.

Smart Ways to Buy the Right Home Insurance

Picking the right homeowners insurance isn’t just about checking a box for your lender. It’s about actually protecting your stuff and your peace of mind. Way too many folks just sign whatever policy their real estate agent suggests, or even worse, pick the cheapest option and call it a day. Here’s how to sidestep those rookie mistakes and get this right.

• Know what you have to cover. Make a home inventory. Walk through your house and list your stuff—electronics, furniture, jewelry, tools, even what’s in the garage. You can use a simple notebook or your phone. When it comes claim time, this makes things way easier and gets you paid faster.
• Don’t guess on home value. Your home’s replacement cost isn’t the same as market value. Market value factors in land and neighborhood. Insurance is about replacing your actual house—roof, walls, floors—at today’s construction prices. Many people underinsure because they guess low. Ask your insurer for a replacement cost estimator or get an appraisal if you want to be sure.
• Compare your options. Don’t just go with one company. Get quotes from at least three solid insurers (think State Farm, Allstate, Travelers). Prices for nearly identical coverage can be a few hundred bucks apart. That’s real money.
• Look at the deductible. A higher deductible means lower monthly payments, but you’ll eat more costs up front if you ever have to file a claim. Find a number you’re actually comfortable with—most people use a $1,000 deductible, but sometimes bumping up to $2,500 can save a lot each year.
• Don’t skip discounts. Got a security system, smoke detectors, or deadbolt locks? Many companies knock your rate down for these. Bundle your home and auto? Even better, discounts can be 10%-25% off your total premium. Just don’t assume they’ll be applied automatically—ask for them.

Here’s a quick comparison of average annual premiums in the U.S. (2024 data):

If there’s one tip to remember: buy enough coverage so if disaster hits, you’re not left couch-surfing or dipping into your savings to rebuild. Read the exclusions section. Ask what’s not covered—floods, earthquakes, and sewer backups usually need separate policies. Protecting your home is too important (and too dang expensive) to leave up to chance.