Which type of policy covers personal property at its actual cash value?

The HO-1 policy is a basic homeowners insurance policy that provides coverage for specific perils and is designed to cover personal property at its actual cash value (ACV). Actual cash value entails compensation based on the replacement cost of the property minus depreciation, reflecting its current worth rather than the full replacement cost.

Homeowner policies, such as HO-2 and HO-3, offer broader coverage but typically apply replacement cost for personal property in more comprehensive options. The HO-5 policy provides even more extensive coverage than the others and generally substitutes replacement cost for personal property as well. The HO-1 policy's focus on actual cash value makes it distinct from these other forms, which typically do not cover personal property in this manner. Understanding these distinctions is crucial when choosing the right type of policy based on the coverage needs for personal belongings.