HO-3 Insurance


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Purchasing a home is a huge accomplishment, but it’s also a big investment. Before you start unpacking, you need to purchase a homeowners insurance policy.

If you’ve never purchased homeowners insurance before, you might not realize that there are several types of policies available. The difference in policies is the amount of coverage they offer. In this article, we detail HO-3 insurance, which is the most common type of homeowners insurance policy.

What is HO-3 insurance?

HO-3 insurance is the most standard home insurance policy. Almost every private insurance company offers it. At a high level, it covers your home, your personal belongings and your liability as a homeowner.

HO-3 insurance policies are available for single-family homes, multi-family homes and townhouses. To get an HO-3 policy, you have to live in the dwelling that’s insured.

What does an HO-3 policy cover?

An HO-3 insurance policy includes basic coverages that you’ll find with most homeowners insurance policies, including:

  • Dwelling coverage: Dwelling coverage protects the exterior of your home, as well as structures attached to your home, like a porch or garage. It also covers other structures, which include pools, sheds and fences.
  • Personal property coverage: Personal property coverage protects your personal items, like clothing and furniture, from covered perils.
  • Liability coverage: Liability coverage will pay for your legal fees if someone gets hurt on your property, or if you accidentally damage someone else’s property, and you go to court.
  • Medical payments coverage: Medical payments coverage will help pay for a guest’s medical expenses if they get injured at your home.
  • Additional living expenses: Additional living expenses will pay for your hotel, food, laundry and parking expenses if your home is damaged by a covered peril and you have to temporarily relocate.

One thing that sets HO-3 policies apart from others is the type of coverage it includes. HO-3 insurance covers the physical structure of your home on an open-perils basis. That means any loss is covered that is not explicitly excluded from your policy.

HO-3 insurance covers your personal property on a named-perils basis, which means your personal items are only covered from a list of specific perils that are written in your policy. There are typically 16 covered perils, which include things like fire, wind, accidental water damage, theft, vandalism, explosions and freezing.

Another thing to know about HO-3 policies is that they include replacement cost coverage for your dwelling and personal belongings. That means depreciation is not factored into your payout after a loss. So, if your personal items are damaged by a covered peril, your insurance company will reimburse you for the full value of the item.

HO-3 policy exclusions

Despite the fact that HO-3 insurance covers your home on an open-perils basis, it doesn’t cover everything. In fact, some common causes of home damage are excluded from HO-3 policies, including:

  • Earthquakes
  • Floods
  • Sinkholes
  • Sewer backup
  • Government intervention
  • Wear and tear
  • Damage due to lack of maintenance
  • Rodent or pest infestation
  • Rust, mold and corrosion
  • Damage from pets

Depending on where you live, it’s a good idea to purchase additional coverage to supplement your HO-3 policy. For instance, if you live in California, consider purchasing an earthquake insurance policy. If you live in an area that is prone to hurricanes, like Florida or Louisiana, having flood insurance can save you a lot of out-of-pocket costs.

Who needs HO-3 coverage?

HO-3 insurance policies are ideal for the average homeowner. The vast majority of homeowners in the U.S. have this type of insurance. Assuming your home is moderately priced, and your personal belongings aren’t worth millions, HO-3 insurance is what you need. You can always add endorsement policies to your HO-3 insurance if you need coverage above and beyond the policy limits.

However, there are other types of home insurance out there. If you live in a new home, somewhere that has a low risk of natural disasters and crime, you might qualify for an HO-5 policy. If you live in an older home, especially one that is historic or architecturally significant, you can purchase an HO-8 policy. Both HO-5 and HO-8 insurance policies provide more coverage than HO-3 policies.

Frequently asked questions

What does HO-3 insurance cover?

HO-3 insurance includes all of the standard home insurance coverages, including dwelling, personal property, other structures, liability, medical payments and additional living expenses coverage. HO-3 policies cover the physical structure of your home on an open-perils basis, while your personal belongings are covered on a named-perils basis.

Where can I get Ho-3 insurance?

Most private insurance companies sell HO-3 homeowners insurance. You can get insurance through a national provider, or a local provider. If you already have an auto insurance policy, you can probably qualify for a discount if you buy home insurance through the same provider.

How much does HO-3 insurance cost?

The cost of HO-3 insurance is different for everyone. There is a long list of factors that contribute to your insurance rate, including your state, your age, your claims history, the age of your home and the size of your home. Because of that, it’s important to shop around for insurance to see which provider can give you the best price.