What Is An HO-3 Insurance Policy?
July 27, 2022

What Is An HO-3 Insurance Policy?

Your personal property, as well as the building and contents of your house, are all protected by homeowner’s insurance. In contrast to auto insurance, homeowners insurance is not mandated by law. However, your lender may frequently demand that you have coverage for your house if you’re looking for a mortgage.

Depending on the kind of residence—a condo, house, mobile home, or new construction—there are many forms of homeowners insurance. Special form HO-3, which offers higher coverage than HO-1 or HO-2, is the most popular type of homeowners’ insurance policy.

Homeowners’ insurance policy forms created by the Insurance Services Office (ISO), a firm that offers data and consulting services to the insurance industry, are often the basis for HO-3 policies. The fact that insurance is based on ISO HO-3 is not a guarantee that it complies with those criteria completely, and various insurers do not provide the same coverage under each of their particular HO-3 policies.


Even those who are more aware of the industry may find it a little complicated these days because there are so many companies offering house and property insurance. Whether you’re looking to get house insurance for the first time or have previously done so and want to find better coverage, you’ll need to choose whether you want to make your comparison shopping or work with a broker.


Determine exactly what sort of homeowner’s insurance you need and what coverage(s) you require as the first step. Insurance policies (“HO3 Homeowners Policy”) may contain coverage for your home, extra structures on your property (such as garages, storage buildings, swimming pools, etc.), and specific items inside your home.

When your house becomes uninhabitable due to things like severe weather damage, rodent infestation, broken plumbing or a flooded basement, etc., this form of coverage can also cover those situations.

HO-3 insurance covers your home, additional structures on your property, as well as your possessions, against a variety of perils, or occurrences that might result in loss or damage to your house, including fire or break-in. Additionally, this kind of insurance protects you against personal liability claims and higher living costs if you have to momentarily relocate (more on that later).

This homeowner’s insurance provides named-peril coverage for your items as well as open-peril coverage for the structure of your house. Unless anything is specifically excluded, open-perils insurance provides coverage for all hazards. A named-hazards policy, in contrast, solely covers the perils stated in your policy.


Open peril: protects you against any claims, unless they are specifically mentioned. On an open peril policy, the following are often not covered:

  • Settling, wear and tear
  • Pets, other animals and pests
  • weather that exacerbates other loss sources that have been ruled out
  • Government and association actions
  • Defective construction, design and maintenance
  • Freezing pipes and systems in vacant dwellings
  • Ice and water weight damage to pavement or foundations
  • Theft from a dwelling under construction
  • Vandalism to vacant dwellings
  • Latent defects, corrosion, industrial smoke, pollution

Named peril: Only the risks expressly mentioned in the policy are covered for your personal property. The 16 typical covered perils are as follows:

  • Theft
  • Vandalism
  • Falling objects
  • Volcanic eruption
  • Damage brought on by snow, ice, or sleet weight
  • Plumbing, heating, or air conditioning system overflow-related water damage
  • Water heater cracking, tearing, and burning
  • Damage from electrical current
  • Pipe freezing
  • Lightning or fire
  • Hail or windstorm
  • Damage caused by aircraft
  • Explosions
  • Riots or civil disturbances
  • Smoke damage
  • Damage caused by vehicles

Why Do You Need HO-3 Insurance?


First off, if you have a mortgage, your mortgage lender will probably insist that you get some kind of homeowners insurance in order to protect its interest in your house. Until you obtain insurance, your lender will buy a policy for you if you don’t have one or if it expires, sometimes at a considerably higher cost than you would pay on your own.

Home insurance is crucial even if you don’t have a mortgage since it may shield your house and personal items from a variety of unforeseen calamities. Your hard-earned money might be protected since this restricts your out-of-pocket costs for covered damages.

How Much HO-3 Insurance Do You Need?


The cost of rebuilding your house, the cost of replacing your personal possessions, and the amount of personal liability coverage you require are just a few of the variables that will determine how much home insurance you need.

It really is a good idea to buy adequate insurance to restore your house fully in case a fire or another insured peril causes it to be destroyed. Prepare a list of your personal possessions, including jewelry, clothes, and furniture to help you decide the amount of insurance you’ll need to replace them. If you own any assets, think about adding insurance riders for more protection.

Determine your net worth before calculating how much personal liability insurance you need. This is the total value of your possessions. Consider getting enough insurance to protect the value of all your belongings . in case you are sued for property damage or physical injury at your home, the Insurance Information Institute recommends that you carry between $300,000 and $500,000 in insurance coverage.

How To Purchase an HO-3 Home Insurance Policy


Follow these steps if you’re prepared to get homeowner’s insurance:


  • Figure out what type of coverage you need.

Pick the house insurance plan that fits your home’s design best. For instance, you have to choose HO-6 insurance if you own a condo.

  • Determine the appropriate level of protection.


Determine the amount of insurance you’ll need to replace your house and your possessions in the event of a disaster. To safeguard your assets, don’t forget to purchase enough personal liability insurance. Multiplying the total square footage of your property by the cost per square foot to rebuild a home in your neighborhood can help you quickly determine the worth of your home at replacement cost. You can receive a more precise amount by working with an insurance agent or appraiser.

  • Compare prices.

Request estimates from three to five different insurance companies so you may choose a plan that fits your requirements and price range. Make sure the quotations you compare to cover the same coverages.

  • Select and buy your coverage.

Choose how much coverage you require after locating the ideal insurance provider, then go ahead and buy your policy.

How Is An HO3 Policy Different From Other Types Of Homeowners Insurance?


The major reason HO3 plans are so popular is that they provide a perfect blend of dependable, cheap coverage against a wide range of hazards. However, depending on your coverage requirements and the sort of property you own, another type of home insurance may be a better fit.

Your insurer may help you to determine your needs and the best sort of insurance for you. We’ve listed below what differentiates various forms of house insurance coverage from an HO3.


o   HO1 policies only offer named-perils coverage for your home.

o   HO2 policies only offer named-perils coverage for your home and personal property.

o   HO4 policies (renter’s insurance) cover personal property and liability, but not the home itself. Some HO4 policies also include Coverage D.

o   HO5 policies are like HO3 policies, but they offer higher limits and cover a broader range of perils. They are usually recommended for brand-new homes.

o   HO6 policies are similar to HO3 policies, but they are designed exclusively for condos, and the dwelling coverage they provide is limited to the inside of the home.

o   HO7 policies are like HO3 policies, but they are specifically for mobile homes.

o   HO8 policies are like HO3 policies, but they are specifically for older or historically significant homes.



There are many formats for homeowners’ insurance plans, ranging from HO-1 through HO-8. The kind of house you live in and the amount of coverage you require will determine which home insurance plan is ideal for you. The most typical kind of homeowners insurance is an HO-3 policy, which offers a reasonable amount of coverage.

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