What is an HO-3 policy?

An HO-3 policy is insurance lingo for "standard homeowners insurance", but it also refers to a specific legal document that acts as an insurance contract.

Pat Howard 1600

Pat Howard

Published October 16, 2019


  • An HO-3 policy is insurance-speak for “homeowners insurance policy”

  • But it also refers to the specific legal document that states what the insurance company covers and what they don’t cover

  • It also has information about each of the six components of coverage included in a standard policy

If you have homeowners insurance, you most likely have what is called an HO-3 policy—the most common type of home insurance policy in the industry. Also referred to as the Homeowners Policy Special Form 3, an HO-3 is the form or template behind most standard homeowners insurance policies. Your HO-3 policy form is essentially the insurance manual that breaks down how each of the six coverages in your policy work. It also details which perils are covered and which aren’t covered. But since no one person should ever go through the trouble of deciphering this 22-page collection of legalese, we did the dirty work and highlighted the important information you should know about.

What’s included in an HO-3 policy?

An HO-3 policy contains a few sections that serve their own distinct purposes:

  • An agreement section that basically states that the coverage described in the policy will be provided in exchange for a monthly or annual insurance premium
  • A definitions section which essentially defines common insurance lingo that you’ll see throughout the body of the policy. Keep in mind that the HO-3 form is first and foremost and legal document, so all recurring verbiage throughout the policy is defined and explained scrupulously
  • A deductibles section that says the insurance company will only pay for insured losses that exceed the policy deductible, which is the amount that you pay out of pocket for a loss before the insurer pays for the rest
  • Section I - Property Coverages, which define the four coverages in your policy that insure property damage as well as any additional coverages included in standard homeowners insurance. Also known as your policy’s hazard insurance, this section also lists what types of perils are covered by the dwelling and personal property components of your policy, as well as which perils are excluded
  • Section II - Liability Coverages, which define the two coverages in your policy that insure liability claims brought against the insured due to bodily injury or property damage. Similar to Section I, this section of your policy also lists which liability occurrences are excluded from coverage

Here’s a look at the coverages included in a standard homeowners insurance policy and the typical reimbursement limits of each component.

CoverageWhat does this coverage do?What is the insured coverage limit?
Section I - Property Coverages
Coverage A - DwellingCovers the structure of your home and built-in appliancesThe home's replacement cost
Coverage B - Other StructuresCovers detached structures on your property10% of the dwelling limit
Coverage C - Personal PropertyCovers your personal belongings both inside and outside the home50% of the dwelling limit
Coverage D - Loss-of-usePays for additional living expenses while your home is being repaired20% of the dwelling limit
Additional CoveragesExplains all the additional coverages in a standard policy—like debris removal, loss assessment and ordinance or law—and the insured limits of eachVaries by coverage
Section II - Liability Coverages
Coverage E - Personal LiabilityPays for legal and medical bills if you're held liable for injury or personal property damage to someone else$100,000-$500,000
Coverage F - Medical Payment To OthersIf a guest is injured in your home, it pays for their medical bills, regardless of who is at fault$1,000-$5,000

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What perils are covered by an HO-3 policy?

Embedded within Section I of the homeowners insurance policy is a list and description of both insured perils, the damage from which you would be reimbursed if you filed a claim for a loss and excluded perils, the damage from which you wouldn’t be reimbursed for if you filed a claim.

There are two categories of property damage protection within an HO-3. Open perils or all risks coverage for your home and detached structures on your property and named perils coverage for your personal belongings.

Open perils coverage covers your home and other structures against every imaginable peril except for the perils specifically excluded from your policy. Examples of excluded perils are flooding, earthquakes, and nuclear war.

With named perils coverage, your personal property is covered against the 16 perils named in your policy, but that’s it. (Open perils coverage is preferable for the homeowner, as the burden of proof is on the insurance company to prove that a particular peril you’re claiming a loss on isn’t covered.)

For a more comprehensive breakdown of which perils are covered and which perils are excluded, check out our guide on homeowners insurance perils

What is covered by the liability section of an HO-3 policy?

In addition to hazard coverage, an HO-3 homeowners insurance policy also includes an entirely different section of coverage that protects you and your assets against expensive litigation and judgments if you, your dog, or any member of your household who is related to you is held liable for another person’s injury or damage their property. This section of coverage also pays for medical expenses if a guest is injured on your property or if you, a pet, or a member of your household who is related to you accidentally injure someone away from the home. Referred to as medical payments coverage, this is essentially no-fault coverage that will pay for accidental injuries regardless of whether or not you’re liable.

Similar to the open perils portion of Section I, your personal liability coverage details which “occurrences”, or instances of liability exposure are specifically excluded from coverage. Examples of excluded occurrences are injury to a resident of the home; property damage to a resident of the home; intentional injury or property damage to someone else; and any business-related liability occurrences.

HO-3 vs HO-6

There are several types of homeowners insurance policies—everything from HO-1 to HO-8—but the two most common types of policies for property owners are the HO-3 (for homeowners) and HO-6 (for condo owners).

In terms of perils that the two policy types cover, the two are virtually the same—HO-6 also features open perils coverage for the dwelling and other structures and named perils coverage for personal belongings.

The main difference between the two is the particulars of dwelling coverage, or the structure of the home or condominium. Since your condo or co-op building’s HOA insurance or master policy includes a certain amount of coverage for the structure of the unit (such as the interior walls, floors, electrical wiring, and plumbing), an HO-6 essentially acts as supplemental coverage for what’s already covered by the HOA policy. If your condo is renovated or repaired, for example, your HO-6 dwelling coverage should be enough to cover whatever upgrades were made.

Check out our full explainer on what’s covered by condo insurance here

Insurance Expert

Pat Howard

Insurance Expert

Pat Howard is an Insurance Editor at Policygenius in New York City, specializing in homeowners insurance. He has been featured on Property Casualty 360, MSN, and more. Pat has a B.A. in journalism from Michigan State University.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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