What is HO-3 insurance?
An HO-3 policy is the most common type of homeowners insurance policy in the U.S., accounting for roughly 78% of all home policies as of 2020. [1] Also called special form homeowners insurance, HO-3 insurance allows insurers to write comprehensive home insurance coverage at relatively affordable rates for homeowners.
While most home insurance is based on the HO-3, the specifics of your policy could vary depending on your location and insurance provider. For example, some policies may have fewer exclusions or better claim settlement terms than others. This is why it’s important to read through your policy and compare home insurance policy options from several companies to ensure you’re getting the right coverage for your needs.
Key takeaways
HO-3 insurance is the most popular kind of homeowners insurance, providing coverage against all perils except for the ones specifically listed in your policy.
An HO-3 policy is a package policy, which means it includes several types of coverage — most notably dwelling, personal property, and liability.
While you still may be able to purchase HO-2 insurance, it provides significantly less protection than the HO-3 or more comprehensive HO-5 policy option.
What does an HO-3 policy cover?
An HO-3 homeowners insurance policy covers your home, personal belongings, and finances in the event your property is damaged or you’re held liable for an accident. Here are the six main coverages in every standard HO-3 policy.
HO-3 coverages
Coverage | What it covers | Typical amount |
Dwelling | Your house and attached structures, such as a deck | Home's rebuild cost |
Other structures | Standalone structures on your property, such as a barn or shed | 10% of dwelling limit |
Personal property | Your possessions, such as furniture, kitchen appliances, and electronics | 50% of dwelling limit |
Loss of use | Temporary living expenses while your home is being repaired | 30% of dwelling limit |
Personal liability | Legal and medical bills if you're held liable for an injury | $100,000 to $500,000 |
Medical payments | Minor injuries to houseguests | $1,000 to $5,000 |
Dwelling coverage
The dwelling coverage section of your policy covers damage to the home’s structure and anything attached to it, such as a garage or porch. If your house is damaged by a covered loss, your insurance can help pay for repairs or rebuilding costs up to the dwelling limit in your policy.
HO-3 policy exclusions
In an HO-3 policy, your home (dwelling) and standalone structures on your property (other structures) are protected on an open perils basis, which means all types of damage or loss are covered except for the exclusions listed on the policy. That means when you file a dwelling or other structures claim, the burden of proof falls on the insurer to prove the damage or loss is not covered by your policy.
Here are the most common HO-3 insurance exclusions:
Personal property coverage
The personal property section of your policy helps cover the cost of your damaged or stolen personal belongings, such as furniture, clothes, jewelry, and electronics. This coverage applies to belongings inside your house and anywhere else in the world — up to the limits in your policy.
HO-3 named perils
In an HO-3 policy, your belongings are protected on a named perils basis. This means your insurance will only cover damage or loss caused by the 16 specific perils listed in your policy. With this coverage, the burden of proof is on you (not your insurer) to prove the loss was caused by one or more of the named perils.
1. Fire or lightning
2. Windstorm and hail
3. Explosion
4. Riot or civil commotion
5. Damage caused by aircraft
6. Damage caused by vehicles
7. Smoke
8. Volcanic eruption
9. Vandalism and malicious mischief
10. Theft
11. Falling objects
12. Weight of snow, ice, or sleet
13. Accidental discharge/overflow of water
14. Sudden tearing/cracking of appliances
15. Freezing
16. Power surges
Additional living expenses
If your house is badly damaged, your policy’s loss of use coverage can help cover the cost of temporary lodging and relocation expenses while it’s being repaired or rebuilt. Expenses that are typically covered include hotels bills, restaurant meals, pet boarding fees, and more.
Liability coverage
Liability coverage protects you and your finances from expensive lawsuits if you’re ever held liable for someone else’s injury or damaged property. This section of your policy also comes with medical payments coverage that pays out for minor injuries to houseguests — regardless of fault.
HO-3 insurance vs. other types of homeowners insurance
There are several types of homeowners insurance policies for various property types and coverage needs. An HO-4 policy, for example, is specifically to protect renters. And an HO-6 policy is designed primarily for condo owners.
The table below provides a brief breakdown of each policy type and how they compare.
Policy type | Property type | Coverages | Perils insured against |
HO-1 | High-risk homes | Dwelling, personal property | Named (Limited to 10) |
HO-2 | High-risk homes | Dwelling, personal property, liability | Named |
HO-3 | Most single-family homes | Dwelling, personal property, liability | Named (personal property) and Open (dwelling) |
HO-4 | Rental units | Personal property, liability | Named |
HO-5 | High-value homes | Dwelling, personal property, liability | Open |
HO-6 | Condo or co-op units | Dwelling, personal property, liability | Named |
HO-7 | Mobile or manufactured homes | Dwelling, personal property, liability | Named (personal property) and Open (dwelling) |
HO-8 | Older homes | Dwelling, personal property, liability | Named |
HO-3 vs. HO-2 and HO-5
The most common type of homeowners insurance is the HO-3, but some insurers still write coverage on the HO-2 form — particularly for higher risk properties — and the HO-5 is the preferred policy option for high net-worth homeowners with more expensive possessions and multiple property types to insure.
HO-2 policy: Also known as broad form insurance, HO-2 insurance is the cheapest and most limited home insurance policy option. It covers your home, additional structures, and belongings from the 16 named perils listed above.
HO-3 policy: With HO-3 insurance, your home and additional structures on your property are protected with the more comprehensive open perils coverage, while your belongings are protected with named perils coverage.
HO-5 policy: Also called comprehensive form insurance, HO-5 insurance is the most expensive and robust type of homeowners insurance you can buy. It covers your home, additional structures, and personal belongings with open perils coverage.
Frequently asked questions
What’s the difference between an HO-3 and HO-6 policy?
HO-6 policies are designed for condo and co-op owners, while HO-3 insurance is intended for owner-occupied single-family homes. In terms of coverage, HO-6 policies protect both the condo structure and personal property with named perils coverage, while HO-3 policies have open perils coverage for the dwelling and named perils coverage for personal property.
Does an HO-3 policy cover flood damage?
HO-3 policies do not cover damage caused by flooding, regardless of the cause. To cover your home and belongings from flood damage, you’ll need to purchase separate flood insurance.
Why is it called an HO-3 policy?
Most home, condo, and renters insurance policies are based on standardized “forms” written by the Insurance Services Office (ISO), a company that provides advisory services to the property and casualty insurance industry. The HO-3 policy form is the standard home insurance policy form for owner-occupied single family homes, accounting for the vast majority of active policies.
