What is an HO3 Homeowners Insurance policy?

An HO3 policy is a basic homeowner’s insurance policy. It’s basically just a contract between you and your insurer. You agree to pay a monthly fee, called a premium, and in return, they cover you and your property when things go wrong. Well, to some extent they do!!

What is usually covered in an HO3 policy?

HO3, or a homeowners insurance policy, covers you for a bunch of different scenarios. 

  • Coverage A. First off, it protects your home from a wide range of bad situations and can help you recover or repair the damage. In your policy, you’ll find this coverage under something called ‘dwelling coverage” too.
  • Coverage B.  It refers to the other structures on your property. It covers structures that are not attached to your home, such as garages, fences, and swimming pools.
  • Coverage C.  This part will cover you for the contents in your home or away (i.e. your personal property).  
  • Coverage D.  HO3 insurance policies also cover instances when your place becomes uninhabitable. If a pesky peril wreaks havoc on your home, making it unlivable, your extra out-of-pocket expenses will be covered under something called “loss of use.”  In this case, your insurance company will help pay for things like a temporary place to stay, and basic living expenses above and beyond what you’d normally pay (takeout, laundry, parking, etc.).
  • Personal Liability. HO3 insurance covers you if someone gets injured on your property and it’s your fault, or you or anyone listed on your policy accidentally damages someone else’s property or stuff.

Open Vs Named Perils

  • Open Perils.  While there are a few different types of coverage options for when something bad happens, homeowners are most often covered for Structural Damage (Coverage A) and Other Structures (Coverage B) by something called an ‘open perils policy.’  An open perils policy means unless something is explicitly excluded in your policy, it’s covered.  
  • Named Perils. The opposite of open perils.  This refers to a list of 16 specific perils that are covered by your insurer. The perils included are fire, explosions, smoke, and theft. So unlike ‘open perils,’ if your policy doesn’t specify that you’re covered for an earthquake or a flood— you aren’t.

Most HO3 policies, state that Personal Property (Coverage C) is covered under named perils, whereas your Dwelling Coverage (Coverage A) is covered under open perils.

One more thing to note, like all insurance policies, the peril, (or bad thing), must be accidental and sudden. If there’s a chance the damage was caused by negligence, you won’t be covered. So if ‘burst pipes’ wasn’t mentioned on your ‘open perils’ policy, but you previously knew your pipes weren’t in the best shape, your insurer may not cover you.

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