HO3 policies explained
An HO3 policy is the one of the most common types of home insurance. The coverage is written on an open-perils basis for your home and other structures, which means it can cover any risks except for those specifically excluded in the policy. However, it offers named-perils coverage for your personal property, meaning it only covers damage to belongings caused by the events listed in your policy.
These policies are usually intended for the single-family homes, multi-family homes, and townhouses. The property owner must live in the home and not rent any part of it.
What homeowners need to know about HO3 policies
The first thing to know is home insurance is written on a variety of forms. These forms standardize coverage from insurance company to insurance company. Which form your agent uses for your home depends largely on how much coverage you need.
HO3 is typically used for owner-occupied homes because it offers reliable, affordable coverage for common risks.
What does an HO3 home insurance policy cover?
HO3 policies typically pay for:
- Damage to the home (Coverage A).
- Damage to other structures on your property, like fences or detached garages (Coverage B).
- Damage to or theft of personal belongings, like clothes, furniture, etc (Coverage C).
- Additional living expenses when a covered claim keep you from living at home (Coverage D).
- Legal expenses when you or a household member is sued over someone's injuries or property damage (Coverage E or personal liability).
- Medical payments when guests are injured at your home (Coverage F).
What perils does an HO3 policy not cover?
For your home and other structures, HO3 is an open-perils policy. That means your insurance company can pay for damage to your home unless it’s caused by an event listed in the policy as an exclusion. Some common HO3 policy exclusions are:
- Earth movement, such as an earthquake, sinkhole, and mudflow.
- Water damage from flood, sewer backup, or water seeping in through the foundation.
- Demolition of your home required by law to bring it to code.
- Seizure or demolition by a government agency or public authority.
But coverage for the contents of your house is different. HO3 policies insure your personal property on a named-perils basis, meaning your insurer only pays for damage caused by events listed in the policy. Those named perils are usually the same 16 listed on an HO2 policy:
- Fire or lightning
- Hail or windstorms
- Riots or civil commotion
- Damage from aircrafts
- Damage from vehicles
- Malicious mischief or vandalism
- Volcanic eruptions
- Falling objects
- Weight of ice, snow, or sleet
- Accidental discharge of water or steam
- Sudden and accidental tearing apart, cracking, burning, or bulging of certain household systems
- Freezing of household systems
- Sudden and accidental damage from artificially generated electrical current
You can get open-perils coverage for your personal belongings by adding an endorsement to your policy.
You could also schedule your valuable items. Scheduled property is an insurance term that means your items are individually listed in the policy along with the amount of coverage each gets. When property is scheduled, an HO3 policy insures it on an open-perils basis.
What are the benefits of an HO3 Policy?
One of the big benefits of an HO3 policy is that it offers replacement cost coverage for your home and other structures. Some HO3 policies default to insuring personal belongings for their replacement cost; others require you to add that on.
Instead of only paying out the depreciated value of your home or other structures like an actual cash value policy, replacement cost coverage pays what it really costs to replace or rebuild with similar, new items today.
Put another way: you'll actually have the funds you need to buy new replacements and rebuild your home after a loss.
How to get an HO3 insurance policy
Getting H03 coverage for your home starts with understanding what it is you'd like to cover. If you're sure this is the policy you need, the next step is getting several H03 quotes and comparing coverage options.
You’ve come to the right place! We offer HO3 policies here at Kin Insurance. You can read more about it or get a quote for HO3 coverage on our Homeowners Insurance Quote page.
If you own a condo or rent our your property, we can help with that, too. Check out our condo insurance and landlord insurance.