HO-3 insurance policy, also known as a “standard homeowners insurance” policy or “special form” policy, is the most common type of homeowners insurance that provides coverage for damage to a person’s home and personal property. It also includes liability coverage in case someone is injured on the property. This type of policy is commonly purchased by homeowners who have a mortgage on their property.
What does an HO-3 insurance policy cover?
An HO-3 insurance policy covers a variety of different things, including:
Dwelling coverage
This coverage provides protection for the physical structure of the home, including the roof, walls, and foundation. It covers damage from events such as fire, lightning, and windstorms.
Other structures coverage
This coverage provides protection for structures on the property that are not attached to the main dwelling, such as a detached garage or shed.
Personal property coverage
This coverage provides protection for personal belongings inside the home, such as furniture, electronics, and clothing. It covers damage from events such as fire, theft, and vandalism.
Liability coverage
This coverage provides protection in case someone is injured on the property and sues the homeowner. It also covers damage that the homeowner may cause to someone else’s property.
Additional living expenses
This coverage provides reimbursement for expenses incurred if the homeowner needs to temporarily relocate due to a covered loss.
Medical payments to others
This coverage provides payment for medical expenses incurred by someone who is injured on the property, regardless of fault.
What perils does an HO-3 policy protect against?
An HO-3 policy generally provides protection against the following perils:
- Fire or lightning
- Windstorm or hail
- Explosion
- Riot or civil commotion
- Damage caused by aircraft
- Damage caused by vehicles
- Smoke
- Vandalism
- Theft
- Volcanic eruption
- Falling object
- Weight of ice, snow, or sleet
- Accidental water overflow or steam
- Sudden and accidental tearing apart, cracking, burning, or bulging of certain household systems (e.g. plumbing, heating, air conditioning, etc.)
- Freezing
- Sudden and accidental damage from electrical current
What does an HO-3 insurance policy not cover?
An HO-3 insurance policy typically does not cover damage from floods or earthquakes. It also does not cover damage from wear and tear, mold, or termite infestation. In addition, it may not cover certain types of personal property, such as expensive jewelry or art.
How much does an HO-3 policy cost?
The cost of an HO-3 insurance policy varies depending on a number of factors, such as the value of your home, the amount of coverage you need, and the location of your home. According to the National Association of Insurance Commissioners (NAIC), the countrywide average policy cost is $1,311 per year, or approximately $109 per month.
However, the cost can also vary depending on the value of your home. The following table shows the average yearly and monthly premium for different ranges of home value, based on data from the NAIC:
| Insurance Range | Average Yearly Premium | Average Monthly Premium |
| $50,000 – $74,999 | $737 | $61 |
| $75,000 – $99,999 | $831 | $69 |
| $100,000 – $124,999 | $890 | $74 |
| $125,000 – $149,999 | $944 | $79 |
| $150,000 – $174,999 | $990 | $83 |
| $175,000 – $199,999 | $1,031 | $86 |
| $200,000 – $299,999 | $1,132 | $94 |
| $300,000 – $399,999 | $1,290 | $108 |
| $400,000 – $499,999 | $1,502 | $125 |
| $500,000 and over | $2,181 | $182 |
It is important to note that these are only averages and the actual cost of your policy may be higher or lower depending on your specific circumstances. It is always best to get quotes from multiple insurance companies and compare the coverage and costs to find the best policy for your needs.
Difference between HO-3 and HO-2 policies
The main difference between the two policies is that HO-3 policies offer all-risk coverage for all perils except for specific exclusions, while HO-2 policies only cover specific named perils. This means that an HO-3 policy is generally more expensive than an HO-2 policy, but it also provides more protection for your home and personal property.
HO-3, also known as “Special Form” policy, is an all-risk policy. It provides broad coverage for both property and liability, covering the dwelling, other structures, personal property, liability, and additional living expenses. It also offers protection against a wide range of perils, including fire, theft, windstorm, and more, with some exceptions (such as earthquakes or floods).
HO-2, also known as “Broad Form” policy, is a named policy. It typically covers only named perils such as fire, lightning, explosion and windstorm, with limited coverage for personal property. It also usually only provides protection for the dwelling and other structures. The liability coverage is also generally not included in an HO-2 policy.
Difference between HO-3 and HO-5 policies
HO-3 and HO-5 are both types of homeowners insurance policies, but there is a key difference between the two when it comes to personal property coverage.
HO-3 policy covers personal property only if damaged by a cause named on the policy. It typically covers the personal property’s cash value but not necessarily the replacement cost. In some cases, additional coverage can be added to an HO-3 policy.
HO-5, also known as “Comprehensive Form” policy, covers all damage to personal property, except for damages explicitly excluded from the policy. This type of coverage is more comprehensive and might be a good option for homeowners with more valuable personal property. An HO-5 policy covers the replacement cost of your items, not just the cash value.
How to choose a homeowners insurance
When choosing a homeowners insurance policy, it’s important to consider the value of your home and personal property, as well as the potential risks and hazards in your area. It’s also important to consider any additional coverage that may be needed, such as flood or earthquake coverage.
Additionally, you should compare the coverage and costs of different policies from different insurance companies. You should also read the policy carefully and make sure that you understand the coverage, exclusions and limitations of the policy. It is also advisable to consider the insurance company’s financial stability and claims handling process.
It’s also a good idea to review your policy annually, or when you have major changes in your life such as purchasing a new home, making renovations, or having new valuable items like jewelry or art. This will ensure that you have the right amount of coverage and that you are not paying for coverage you do not need.
Ultimately, it’s important to work with an insurance agent or broker who can help you understand the different options available to you and help you choose the right policy for your needs.
