An HO3 policy is the most commonly used homeowners insurance policy, protecting you, your family, and your property (including your personal belongings) against various types of damage.
What is an HO3 Homeowners policy?
An HO3 policy is insurance lingo for a basic homeowners insurance policy. It’s essentially just a contract between you and your insurer. You agree to pay a monthly fee (your premium) and in return, they can have your back when things don’t go your way.
What does an HO3 policy cover you for?
Your HO3, or a homeowners insurance policy, covers you for a bunch of different scenarios, and is split into various categories.
Damage to your actual home and any attached structures falls under ‘dwelling coverage,’ also known as Coverage A.
Coverage B refers to any other structures on your property. It covers structures that are not attached to your home, such as detached garages, fences, and swimming pools.
The Coverage C portion of your HO3 policy will cover damages to your personal property, whether you’re at home or not. That means if your laptop is stolen from your living room, or from a coffee shop, it’s covered.
HO3 insurance policies can also cover instances when your place becomes uninhabitable. If a peril wreaks havoc on your home, making it unlivable, your extra out-of-pocket expenses may be covered under Coverage D, “loss of use.” Your insurance company can help pay for things like a temporary place to stay, and basic living expenses above and beyond what you’d normally be spending (takeout, laundry, parking, etc.).
HO3 insurance will also cover you if someone gets injured on your property and it’s your fault, or you or anyone listed on your policy accidentally damages someone else’s property or stuff. This type of coverage is called ‘personal liability’ coverage, and it appears on most homeowners and renters policies. (Think of it as a backpack as it travels with you, say if your mutt bites or injures someone in your local park.)
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.
Open Vs Named Perils
While there are a few different types of coverage options for when something bad happens, homeowners are most often covered for Structural Damage (Cov A) and Other Structures (Cov B) by something called an ‘open perils policy.’ This simply means unless something is explicitly excluded in your policy, it’s covered. Note that damage from earthquakes and flooding is generally not covered; you’ll want to look into separate insurance coverages for those risks.
The alternative to ‘open perils’ is ‘named perils,’ which refers to a list of 16 specific perils that are covered by your insurer. These types of perils include fire, explosions, smoke, and theft.
Note: Like all insurance policies, the peril, (or bad thing), must be accidental and sudden. If there’s a chance the damage was caused by negligence, you likely won’t be covered.