The Homeowners policy is the most widely sold personal property contract, and it shows up heavily on the licensing exam. What sets it apart from a dwelling policy is that it is a complete package: it combines property protection and personal liability in one contract built for people who live in their homes. This standalone guide walks through every part you need to know — the HO forms, Section I and Section II coverages, the perils, the exclusions, the conditions, and the most common endorsements.

The homeowners concept

A homeowners (HO) policy is a packaged, indivisible policy that wraps several coverages together: the structure, the contents, loss of use, personal liability, and medical payments to others. It is designed for owner-occupants of one-to-four family dwellings, with specialized versions for renters and condominium owners. Eligibility generally requires that the named insured occupy the residence and that it is used principally for residential purposes. Because everything is bundled, homeowners is simpler to buy and broader than piecing together separate policies.

The homeowners forms

The forms differ by who is insured and how broad the coverage is.

HO-2 — Broad Form

Covers the dwelling, other structures, and personal property on a broad named-peril basis. A moderate level of protection.

HO-3 — Special Form

The most common homeowners policy. The dwelling and other structures are open-peril (covered for all causes except exclusions), while personal property is broad named-peril.

HO-4 — Contents Broad Form (Renters)

For tenants. There is no Coverage A (dwelling) because the renter does not own the building. It covers the tenant's personal property (named-peril) plus liability and loss of use.

HO-5 — Comprehensive Form

The broadest standard form: both the dwelling and personal property are open-peril, giving the widest protection and the highest premium.

HO-6 — Unit-Owners (Condo) Form

For condominium owners. Provides a limited Coverage A for the interior of the unit and improvements/betterments (the condo association's master policy covers the building shell), plus personal property and liability.

HO-8 — Modified Form (Older Homes)

For older or historic homes where the cost to rebuild greatly exceeds market value. Coverage is narrowed — a limited peril list and ACV or functional replacement cost settlement — so the home can be insured at an affordable, realistic amount.

Section I — Property coverages

Section I insures the insured's own property.

• Coverage A – Dwelling: the home and attached structures, plus materials on site to build/repair. Usually written on a replacement cost basis when insured to value (commonly 80%+).
• Coverage B – Other Structures: detached garage, shed, fence — generally about 10% of Coverage A.
• Coverage C – Personal Property: belongings of the insured, often around 50% of Coverage A, covered worldwide. Certain categories carry special sublimits (jewelry, watches, furs, cash, firearms, silverware, business property).
• Coverage D – Loss of Use: pays Additional Living Expense (the extra cost of living elsewhere) and Fair Rental Value (lost rent on a rented portion) when a covered loss makes the home unfit to live in.

Section II — Liability coverages

Section II protects the insured against claims from others.

• Coverage E – Personal Liability: pays sums the insured becomes legally obligated to pay for bodily injury or property damage to others, and provides legal defense. It applies both on and off the premises.
• Coverage F – Medical Payments to Others: a no-fault coverage paying reasonable medical bills for non-insureds injured on the premises or by the insured's activities — regardless of who was at fault. It does not apply to the insured's own household.

Covered perils

• HO-2, HO-4, HO-6: broad named-peril lists for dwelling (where applicable) and personal property.
• HO-3: open-peril dwelling/other structures; named-peril contents.
• HO-5: open-peril on both dwelling and contents.
• HO-8: a reduced named-peril list suited to older homes.

A typical broad named-peril list includes fire, lightning, windstorm, hail, explosion, riot/civil commotion, aircraft, vehicles, smoke, vandalism, theft, falling objects, weight of ice/snow/sleet, accidental discharge or overflow of water/steam, freezing, sudden tearing/bulging, artificially generated electrical current, and volcanic eruption.

Key exclusions

Standard homeowners exclusions (applies even to open-peril forms):

• Flood / surface water — covered separately under the national flood program.
• Earthquake / earth movement — added by endorsement or separate policy.
• War, nuclear hazard, and governmental action.
• Ordinance or law (rebuilding to current code) beyond a small built-in amount.
• Intentional loss, neglect, wear and tear, mold (limited), insects/vermin, and power failure away from premises.
• Business activities and motor vehicles (largely excluded on the liability side, with limited exceptions).

Conditions you should know

• Insurable interest and loss settlement: replacement cost on the dwelling typically requires insuring to at least 80% of replacement value, or a coinsurance-style penalty applies.
• Duties after loss: prompt notice, protecting property from further damage, proof of loss, and cooperation.
• Appraisal: a process to resolve disputes over the amount of a loss.
• Subrogation: the insurer can recover from an at-fault third party after paying.
• Other insurance and liberalization clauses round out the conditions.

Common endorsements

• Scheduled Personal Property (Personal Articles): insures specific high-value items above Coverage C sublimits, often open-peril with no deductible.
• Personal Property Replacement Cost: pays contents losses without depreciation.
• Inflation Guard: automatically increases Coverage A over time.
• Water Back-Up and Sump Overflow: covers sewer/drain backups.
• Earthquake: adds quake coverage.
• Ordinance or Law: increases funds to rebuild to code.
• Home Business / Permitted Incidental Occupancies and Identity Theft: tailor coverage to lifestyle.

Common exam traps

• HO-3 vs. HO-5: HO-3 is open-peril dwelling with named-peril contents; HO-5 is open-peril on both.
• HO-4 has no dwelling coverage — renters insure contents and liability only.
• HO-6 building coverage is limited to the unit interior and improvements.
• HO-8 pays ACV/functional replacement, not full replacement cost, and uses a limited peril list.
• Coverage C special limits apply to theft of jewelry, cash, firearms, etc. — schedule them for full value.
• Coverage F is no-fault and for others, never the insured's own injuries.
• Flood and earthquake are excluded in every standard form.

Key terms at a glance

• Section I / Section II — property (A–D) / liability (E–F).
• HO-3 — open-peril dwelling, named-peril contents (most common).
• HO-5 — open-peril on both.
• HO-4 / HO-6 — renters / condo owners.
• HO-8 — older homes, ACV/functional, limited perils.
• Loss of Use (D) — ALE plus fair rental value.
• Medical Payments (F) — no-fault coverage for others.

Quick recap

• A homeowners policy packages property (Section I) and liability (Section II) for owner-occupants, renters, and condo owners.
• Forms run from HO-2 (broad) through HO-3 (open-peril dwelling, most common), HO-4 (renters), HO-5 (open-peril everything), HO-6 (condo), and HO-8 (older homes, ACV).
• Section I covers Dwelling, Other Structures, Personal Property, and Loss of Use; Section II covers Personal Liability and Medical Payments to Others.
• Flood, earthquake, war, wear and tear, and ordinance/law are major exclusions; Coverage C has special sublimits.
• Scheduling, replacement cost, inflation guard, water back-up, and earthquake endorsements close the most common coverage gaps.