What Is an HO1 Policy?

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An HO-1 insurance policy is a named-peril policy and offers the most basic form of coverage. Sometimes called "bare-bones" insurance, HO-1 policies cover your dwelling against 10 named perils, including fire, smoke, windstorms and theft. HO-1 policies do not provide coverage for personal property or personal liability.

Sometimes called "bare-bones" insurance, HO-1 policies cover your dwelling against 10 named perils.

Due to the limited coverage, many mortgage lenders would not accept an HO-1 policy as proof of insurance, and most insurers do not sell it. An HO-1 policy would be most suitable for those who have fully paid off their homes and are comfortable with the potentially expensive risk of having very low coverage.

What Is an HO-1 Policy?

An HO-1 policy is a named-peril policy that offers the most basic and affordable type of homeowners insurance. Under an HO-1 policy, you have dwelling coverage for 10 out of 16 named perils, including fire and lightning, explosion, smoke, theft, vandalism and riots. Compared to the other policies, HO-1 policyholders have the least coverage and assume the most risk against catastrophic losses and damages.

An HO-1 policy is one of eight types of homeowners insurance policies:




The most basic homeowners insurance policy that offers the least amount of coverage. No personal belongings or liability coverage is included. Covers 10 perils.


Named-peril policy that provides more coverage than an HO-1 policy, but less than an HO-3 policy. Covers 16 perils.


Open-peril policy that offers broader coverage than HO-1 and HO-2 policies. Commonly used by homeowners and accepted by mortgage lenders.


Insurance policy for renters (e.g., apartments, single rooms).


The most comprehensive form of homeowners insurance.


Insurance policy for condo owners.


Insurance policy for those who live in mobile homes.


Insurance policy for older and historic homes.

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HO-1 Policies: What's Covered and Not Covered

Named Perils


1. Fire or lightning


2. Windstorm or hail


3. Explosion


4. Riot or civil commotion


5. Damage by aircraft


6. Damage by vehicle


7. Smoke


8. Vandalism or malicious mischief


9. Theft


10. Volcanic eruptions


11. Falling objects


12. Weight of ice, sleet, snow


13. Sudden/accidental discharge or overflow of water/steam from appliances, heating or air conditioning systems


14. Sudden/accidental tears, bulges, cracks and burns of  HVAC or hot water systems or water heating appliances


15. Freezing of plumbing, heating, air conditioning and fire sprinkler systems


16. Sudden/accidental damage from power surges


What an HO-1 Policy Doesn't Cover

You are not covered for any events outside the 10 perils explicitly listed on your policy. You also do NOT have coverage for any of the following:

  • Liability protection: Pays for legal costs if you're liable for property damages or injuries incurred while on your property.

  • Medical payments to others: Covers medical expenses, like surgical costs, nursing care, among others.

  • Loss-of-use (Additional living expenses): Covers certain costs, such as hotel bills, if you're displaced from your home (e.g., home is being rebuilt after a fire).

  • Personal property: Covers your personal property if it is damaged or stolen.

  • Additional perils: Includes weight of ice, snow or sleet, accidental overflow of water/steam as well as short circuits.

  • Other coverages: Flood, earthquakes, mold, pet damage and neglect are not covered. These are commonly excluded in other types of homeowners insurance policies, as well.

You are not covered for any events outside the 10 perils explicitly listed on your policy.

Is an HO-1 Policy Enough for My Home?

An HO-1 policy will probably not be enough to protect your home. To start, the insurance coverage on an HO-1 policy typically does not meet the insurance requirements for closing on a mortgage loan.

Consider an HO-2 policy, which would protect your personal property and your liability

While it may increase the cost of homeowners insurance, consider an HO-2 policy, which would protect your personal property and your liability for injuries or losses on your property, or buy other types of coverage to plug some of the holes in coverage. For example, many Californians live within 30 miles of an active fault — earthquake coverage is worth considering. Flood insurance coverage may be a smart idea for those who live along the coastline or in high-risk flood zones. 

Named vs. Open Peril Policy

A "peril" in insurance is an incident that can trigger a claim if a policyholder suffers any losses or damages. HO-1 is a named-peril policy, but what does that mean?

A "named-peril" policy covers listed perils and ONLY those perils. An HO-1 policy is a named peril policy because it provides coverage for only the 10 named perils (e.g., fire, theft, windstorm).

An "open-peril" policy will cover any peril not specifically excluded. An HO-3 policy that excludes earthquakes and mold damage, for example, would cover any perils except earthquakes and mold damage.

Named-Peril Policy

Open-Peril Policy

Provides coverage for ONLY the specific perils listed.

Provides coverage for perils EXCEPT for those specifically excluded.

Example: In John's named-peril policy, only fire damage is a covered loss. James is covered when half his home is damaged after a kitchen fire. James is NOT covered when his home is damaged and his property is stolen after a burglary.

Example: Jane's open-peril policy excludes flooding. Jane is covered when her home suffers fire damage and vandalism after a riot. Jane is NOT covered when her neighborhood suffers a hurricane and her basement is flooded.

Typically more affordable but offers less coverage.

Typically more expensive but offers more coverage.

Best for: Homeowners that live in a low-risk area and are comfortable with assuming the increased risk. 

Best for: Homeowners that want the peace of mind in having additional protection against multiple perils.

HO-1 Policy FAQs

What perils does HO-1 cover?

An HO-1 policy protects against 10 named perils: aircraft, fire and lightning, explosion, riots and civil commotion, smoke, theft, vandalism and malicious mischief, vehicles, volcanic eruptions, windstorm and hail.

What is the difference between an HO-1 and an HO-2 policy?

HO-1 policies provide coverage against 10 named perils, while HO-2 policies cover all 16 named perils. For example, damages from falling objects would be a covered peril under an HO-2 policy, but not an HO-1 policy.

What is the difference between HO-1 and HO-3?

An HO-1 policy is a named-peril policy (only listed perils are covered) and an HO-3 policy is an open-peril policy (you're covered for any perils except those listed). Generally, an HO-3 offers more protection, including personal belongings and liability, and is accepted by most mortgage lenders.

How To Get an HO-1 Homeowners Insurance Policy 

Finding an insurance company that offers HO-1 policies is becoming increasingly challenging. Since mortgage lenders require more coverage the demand for an HO-1 policy has decreased and many insurers do not sell it. 

If you have already paid off your mortgage and are set on buying an HO-1 policy while assuming some potentially expensive risks associated with owning a home, SmartFinancial can help. Let us find the best homeowners insurance policy that fits your budget. 

With free quotes from 200+ insurance carriers, you're bound to find a policy that's right for you. Just enter your zip code below to get started on a free quote.

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