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 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 or two more, but the core list is consistent across the industry:

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.

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 — 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.

Today, many insurance carriers have discontinued the HO1 entirely, and it is no longer offered in a large number of states. According to industry data, HO1 policies accounted for only about 1.81% of single-family home policies nationwide in recent years — a clear sign of its near-total obsolescence.

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: Common damage events like water backup, falling objects, or ice damage aren't covered, leaving the lender's collateral exposed.
• 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 require at minimum an HO3-level policy — and some may accept an HO2 — but an HO1 is generally considered insufficient to satisfy a mortgage agreement's insurance requirement.

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 due to their replacement cost exceeding market value. The HO8 is still actively offered by select insurers and 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 is widely available. 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.

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.

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. It's more limited than an HO3 but is 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.

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 has been discontinued by the majority of carriers and is no longer offered in many states. Industry data shows HO1 policies represent less than 2% of all single-family home policies nationwide. If a provider quotes you an HO1, it's worth asking whether a broader policy is available before accepting it.

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 under an HO1 policy.

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

Mortgage lenders require insurance that adequately protects the property they've financed. HO1 policies cover too few perils, pay out on an actual cash value basis (accounting for depreciation), and provide minimal liability protection. This leaves too much financial risk unaddressed. Most lenders require at least HO3-level coverage, which offers open-peril protection for the dwelling and replacement cost value payouts.

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

While HO1 policies do carry lower premiums due to their limited coverage, the actual dollar difference is often smaller than homeowners expect — typically a few hundred dollars per year depending on your location and home value. Given that a single uncovered claim under an HO1 could cost tens of thousands of dollars 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.