And if you have substantial assets, you should consider purchasing additional insurance, called "umbrella coverage," to protect against liability.
There are 6 different types of homeowner's insurance. The most popular of which is called HO-3. (HO-4 and HO-6 are not traditional homeowner's policies, they are renter's and condominium/co-op owners insurance.)
The other homeowner's policies (HO-1, HO-2, and HO-5) offer varying degrees of coverage - the smaller the number, the fewer types of damage the policy covers (and the lower the premium).
- HO-1 and HO-2 coverage do not insure the policy-owners' personal belongings, and only protect against damages specifically listed on the policy.
- HO-3 coverage protects against all types of damage, except for those specifically excluded by the policy. HO-3 also protects personal belongings, but only for specific types of damage (typically at the HO-2 level).
- HO-5 offers the same coverage as HO-3, but extends full protection to all personal belongings. HO-5 is more expensive than HO-3, but experts recommend paying the higher premium. Some insurance companies do not offer HO-5, in which case riders can be added to the policy to provide greater protection of personal belongings.
- HO-4 and HO-6 only cover belongings, and only for the types of damage specifically listed on the policy. In a condo or co-op, the buildings will be covered by the insurance the board purchases for the entire complex.
Source - InvestorGuide.com