What is an HO3 Homeowners Policy? What Does it Cover?

What is an HO3 Homeowners Policy? An HO3 Homeowners Policy policy is the most commonly used homeowners insurance policy, protecting you, your family, and your property (including your stuffs) against several bad things that could damage your property.

Most of the homeowners you know, including yourself, probably have an HO3 home insurance policy. That’s because an HO3 is one of the most popular types of homeowners insurance for people who own (not rent) their single-family home, multi-family home, or townhome. It also gives you more coverage than the HO1 or HO2. 

Independent insurance agents usually recommend homeowners buy, at the very least, an HO3 homeowners policy, the reason being that an HO3 will cover your property for ANY risks except the ones clearly excluded by the policy documents. (By the way, that’s called an “open perils” or “special forms” policy.) 

What is an HO3 Homeowners Policy?

An HO3 Homeowners Policy is a coverage plan that covers your home’s structure, your personal belongings and liability in the event of damage or injury. Typically, an HO-3 policy will also cover additional living expenses and protection for other structures on your property. Sometimes noted as a “special form” policy, it is purchased for traditional, standalone homes rather than other types of homes like duplexes or condominiums.

Why do you need HO-3 coverage?

Homeowners need HO3 Homeowners Policy because it provides financial coverage should your home’s structure get damaged from natural disasters and other perils such as theft or fire. Throughout your life as a homeowner, many unexpected injuries can occur as well, which is why liability protection is included in your policy. HO-3 also protects your personal belongings, acting as a cushion for costly replacements or repairs. Because of the multiple tiers of protection, it’s usually required when getting a mortgage loan, as it helps to safeguard your (and your lender’s) monetary investment.

Everything Else You Need to Know About HO3

Your independent insurance agent will recommend different home insurance policy types based on how much coverage your property really needs. Most agents recommend an HO3 for owner-occupied houses because it covers many common risks. 

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What does HO3 Homeowners Insurance Policy Cover?

What is an HO3 Homeowners Policy

HO3 policies usually protect against the same 16 dangers as an HO2 plan: 

  1. Fire and lightning
  2. Explosions
  3. Smoke
  4. Hail and wind
  5. Malicious mischief and vandalism
  6. Theft
  7. Volcanic eruptions
  8. Falling objects
  9. Freezing of household systems
  10. Weight of sleet, snow, and ice
  11. Accidental flooding from stream or water
  12. Sudden and accidental tearing apart, burning, cracking or bulging of household systems
  13. Sudden and accidental damage from artificially generated electrical current
  14. Riots and civil commotion
  15. Aircraft
  16. Vehicles

On the flip side, HO3 policies usually do have some exclusions (or things the insurer will not cover): 

  • Earthquake, mud flow, and sinkhole (called “earth movements”)
  • Demolition of your residence ordered by a court and to bring it into code
  • Demotion or seizure of property by a public authority or government agency
  • Water damage from water seepage under the foundation, sewer backup, flood
  • Power failure
  • War
  • Neglect
  • Mold

Your independent insurance agent can talk with you about possibly adding endorsements, or extra coverages, to your HO3 policy if you’re not satisfied with its general features. To get those extra protections, you will have to pay a bit more premium but most homeowners think it’s really worth it. The peace of mind is priceless anyway, right? 

Why Get An HO3 Insurance Policy?

For starters, homeowners insurance is usually required if you have a bank loan or mortgage. That’s because it protects you and the bank’s investment by repairing damages to your home. Aside from that, getting insurance for one of the biggest investments you’ll make in a lifetime is pretty much a no-brainer.

Your HO3 policy can also cover you in the event of smaller, all-too-common-situations, like your laptop getting stolen at a coffee shop, your pipes bursting in the winter, or your stuff catching fire due to faulty wiring.

But even if you don’t make a claim, home insurance can also alleviate any worry or anxiety that anything might happen. It allows you to rest easy, knowing you’re protected even in the event of a worst-case scenario.

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