HO3 Policy

An HO3 policy is the most commonly used homeowners insurance policy, protecting you, your family, and your property (including your things!) against several bad things that could damage your property.


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, called a premium, and in return, they can have your back when things don’t go your way.

What does an HO3 policy cover you for?

HO3, or a homeowners insurance policy, covers you for a bunch of different scenarios. First off, it protects your home from a wide range of bad situations and can help you recover or repair the damage. In your policy, you’ll find this coverage under something called ‘dwelling coverage,’ also known as Coverage A.

Coverage B refers to the other structures on your property. It covers structures that are not attached to your home, such as garages, fences, and swimming pools.

Your HO3 policy will also cover you for the stuff you own (i.e. your personal property) when you’re at home, or anywhere else. In insurance lingo, this is called Coverage C (Cov C for Contents. Get it?).

But wait, there’s more! HO3 insurance policies also cover instances when your place becomes uninhabitable. If a pesky peril wreaks havoc on your home, making it unlivable, your extra out-of-pocket expenses will be covered under something called “loss of use.”

Under this type of coverage (Coverage D), your insurance company will help pay for things like a temporary place to stay, and basic living expenses above and beyond what you’d normally pay (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’ insurance, 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.)

So, it’s safe to say that your HO3 policy can cover you for a whole bunch of different situations that could seriously hurt your wallet.

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. Pretty sweet, right?

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. So unlike ‘open perils,’ if your policy doesn’t specify you’re covered for an earthquake or a flood— you aren’t.

Under your HO3 policy, your stuff, aka Personal Property (Coverage C) is covered under named perils, whereas your Dwelling Coverage (Coverage A) is covered under open perils.

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 won’t be covered. So if ‘burst pipes’ wasn’t mentioned on your ‘open perils’ policy, but you previously knew your pipes weren’t in the best shape, your insurer may not cover you.

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