HO1 Insurance Policy: Understanding Basic Form Homeowners Coverage

What Is an HO1 Insurance Policy?

An HO1 insurance policy, formally called the Basic Form, is the most stripped-down homeowners insurance policy that exists. Introduced in the early 1950s when the Insurance Company of North America first bundled home, contents, theft, and liability protections into a single package, the HO1 was designed to be an affordable entry point into homeownership coverage. It operates as a named-perils policy, meaning your insurer will only pay for damage caused by events explicitly listed in the policy. If a hazard isn't on that list, no matter how devastating, your claim will be denied.

Unlike the named perils vs all-risk distinction that defines more modern policies, the HO1 offers no flexibility. It is exclusively named-peril and covers a very short list of events. It also typically pays claims on an actual cash value (ACV) basis, meaning depreciation is factored in and you will almost never receive enough to fully replace what was damaged.

The 10 Named Perils Covered by HO1

Most HO1 policies cover exactly 10 perils. Some older or state-specific versions may add one more, but the core list has remained consistent through 2026:

HO1 vs. HO2 vs. HO3: How the Policies Stack Up

Understanding how HO1 compares to the more widely available HO2 broad form policy and the industry-standard HO3 is critical for making an informed decision. For a full breakdown of every policy type, see our guide on the types of home insurance policies.

Here is a more detailed breakdown of all three policy types side-by-side:

The HO2 policy is a meaningful upgrade from HO1, adding six additional named perils including falling objects, weight of ice and snow, accidental water discharge, and electrical surges. But even the HO2 falls short of what most lenders and financial advisors recommend. The HO3, and the even more robust HO5 policy detailed in our HO3 vs HO5 comparison, offer open-peril dwelling coverage, meaning any cause of loss is covered unless it's specifically excluded.

Why HO1 Is Rarely Used and Hard to Find Today

A Policy That Hasn't Kept Up With the Times

When HO1 was introduced in 1950, it was a genuine innovation. For the first time, homeowners could bundle multiple protections under one policy. But the insurance industry evolved quickly. By the 1960s, insurers were offering broader coverage at competitive prices, and consumer demand rapidly shifted toward more comprehensive protections. The HO3 became the de facto standard for owner-occupied homes, and the HO1 was quietly left behind.

As of 2026, the ISO HO1 form has been discontinued in nearly all states, and major national carriers including Allstate and Progressive have publicly confirmed that HO1 policies are unavailable in most states. Hawaii's 2026 homeowners premium publication and multiple 2026 consumer guides note that few homeowners select the Basic Form and most insurers no longer offer it. Historical Policygenius data pegged HO1 at just 1.81% of single-family policies, and industry inference based on NAIC market data and regulator commentary continues to place HO1's share of the U.S. homeowners market well under 5%.

Why Mortgage Lenders Won't Accept It

If you have a mortgage on your home, your lender has a financial stake in your property. They require insurance that protects that investment adequately. The HO1 fails this test for several reasons:

• Too few perils covered: Fannie Mae's 2026 Selling Guide requires a "Special" coverage form or equivalent covering fire, lightning, explosion, windstorm (including named storms designated by the National Weather Service or NOAA), hail, smoke, aircraft, vehicles, and riot or civil commotion. HO1 leaves out lender-required protections that HO2 and HO3 include.
• Actual Cash Value payouts: ACV means depreciation is deducted from your claim check. After a major loss on an older home, the payout may not come close to covering reconstruction costs.
• No meaningful liability protection: Lenders want to know you're protected against lawsuits that could drain your finances and lead to default.

Most lenders now require an HO3-level policy with dwelling coverage on a replacement cost basis. Fannie Mae and Freddie Mac's March 18, 2026 changes (Fannie Mae Lender Letter LL-2026-03 and Freddie Mac Bulletin 2026-C) now allow actual cash value coverage on roofs for single-family and condo properties, but they explicitly require the rest of the dwelling to remain on a replacement cost basis. Fannie Mae also retired the prior formula requiring sellers/servicers to verify RCV against 100% of replacement cost or 80% UPB. An HO1 still falls short across the board. Learn more about how hazard insurance vs full homeowners insurance is treated by lenders.

HO1 vs. HO8: A Common Mix-Up

Homeowners with older or historic properties sometimes confuse HO1 with the HO8 modified coverage form. Both cover 10 named perils and pay on an actual cash value basis, but the HO8 is specifically designed for older homes that can't qualify for standard coverage because their replacement cost exceeds market value. The HO8 remains actively offered and, at an average of $2,035 per year in 2026, serves a specific niche, making it a more purposeful choice than the outdated HO1.

What to Do Instead: Better Alternatives to HO1

If you've been quoted an HO1 or are considering it purely for cost savings, there are smarter options to explore:

1. Shop for an HO3 Policy The HO3 is the gold standard for most homeowners and accounts for the vast majority of policies written today. It provides comprehensive home insurance coverage with open-peril dwelling protection and is accepted by virtually all mortgage lenders. Always compare quotes from multiple providers, since 2026 rates vary widely by carrier and state (Oklahoma alone averages $5,298 per year according to LendingTree, more than double the national average).

2. Consider an HO2 as a Middle Ground If cost is a real concern, the HO2 broad form offers 16 named perils at a moderate price point, considerably more protection than HO1 and often acceptable to some lenders. Understanding Coverages A through F can also help you evaluate what you actually need.

3. Look Into Your State's FAIR Plan If private insurers won't cover your home due to risk factors, your state's FAIR Plan (Fair Access to Insurance Requirements) provides basic coverage as a last resort. FAIR Plan enrollment has surged in 2026; the California FAIR Plan alone hit 684,388 policies in force as of March 2026, up 152% since September 2022, with total exposure of $750 billion. A 29.1% average statewide rate increase took effect on renewals starting October 15, 2026. FAIR Plans are limited (often fire only) but are a legitimate safety net.

4. Work With a High-Risk Specialty Insurer Small regional carriers and high-risk specialty insurers often cover properties that national carriers won't, and they do so with more comprehensive policies than an HO1. They evaluate your full risk profile rather than applying blanket denials.

5. Address the Underlying Risk Factors If you've been steered toward an HO1 because of property condition issues, fixing those problems (outdated wiring, an aging roof, deferred maintenance) may qualify your home for a full HO3 policy within a policy year. And if your lender only mentions "hazard insurance," remember that requirement is satisfied by a standard homeowners policy, not a stripped-down basic form.

Frequently Asked Questions About HO1 Insurance

Is HO1 insurance still available in 2026?

HO1 insurance is still technically available from a small number of insurers, but it is not sold in most states and the majority of national carriers have discontinued it. Regulators including the NAIC still track it in their 2026 Homeowners Market Data Call, which confirms some in-force policies remain, but modern national carriers like Allstate and Progressive openly note it is unavailable in most states. If a provider quotes you an HO1, ask whether a broader HO2 or HO3 policy is available before accepting.

What perils does an HO1 policy cover?

An HO1 policy typically covers 10 named perils: fire or lightning, windstorm or hail, explosion, riot or civil commotion, damage by aircraft, damage by vehicles, smoke, vandalism or malicious mischief, theft, and volcanic eruption. Any damage caused by a peril not on this list, such as falling objects, pipe bursts, or ice damage, will not be covered. Many 2026 HO1 offerings also exclude liability, loss of use, and even personal property coverage entirely.

Why won't my mortgage lender accept an HO1 policy?

Mortgage lenders require insurance that adequately protects the property they've financed. Fannie Mae's 2026 Selling Guide requires a "Special" coverage form or equivalent and replacement cost coverage on the dwelling, with ACV now allowed only on roofs per the March 18, 2026 update (Lender Letter LL-2026-03 and Freddie Mac Bulletin 2026-C). HO1's actual cash value payouts, narrow peril list, and minimal liability leave too much risk uninsured for lender acceptance.

How much cheaper is an HO1 policy compared to an HO3?

With 2026 national HO3 premiums averaging between $2,395 (LendingTree) and $2,966 (The Zebra) per year, an HO1 typically saves only a few hundred dollars annually where it's still available. Public national studies don't break out HO1 pricing specifically because the product is so rare. Given that a single uncovered claim could cost tens of thousands out of pocket, the modest savings rarely justify the risk.

What is the difference between HO1 and HO8 insurance?

Both HO1 and HO8 cover 10 named perils and pay claims on an actual cash value basis, but their target audiences differ. HO1 is a general basic-form policy with no specific audience today, while HO8 is specifically designed for older or historic homes whose replacement cost significantly exceeds their market value. If you own an older home, an HO8 is the more appropriate and still actively marketed option of the two.