Homeowner’s insurance evolved in the late 1950s, when the insurance industry needed a single comprehensive policy to cover not only the house, but also the contents and liability. The standard policy has two parts: property insurance and personal liability. The most common policy, HO-3, covers the house and other structures for everything except flood, earthquakes, and other policy exclusions. This is the policy that most mortgage lenders require you to carry as a loan condition.
Other options are HO-2, which is a cheaper policy, and HO-1, a bare-bones policy that covers only risks that are specifically insured, but it is not available in most states. HO-4 is designed for renters, and HO-6 covers condominiums and co-op owners. HO-8 is designed for older homes and reimburses you for damage on an actual cash value basis. That means replacement cost minus depreciation. Depending on the area and house, full replacement cost policies may not be available for some older homes. In fact, they are getting harder to find in just about all areas.
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