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Kristine Lee

Insurance Analyst

  • Licensed Insurance Agent — Property and Casualty
  • 4+ years of Experience in the Insurance Industry

Kristine is a licensed insurance agent who joined The Zebra in 2019 as an in-house content researcher and writer. Before joining The Zebra, she was a…

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Ross Martin

Insurance Writer

  • 4+ years in the Insurance Industry

Ross joined The Zebra as a writer and researcher in 2019. He specializes in writing insurance content to help shoppers make informed decisions.

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What is an HO-3 insurance policy?

An HO-3 is the most common form of home insurance coverage in the US. Among other things, this policy form covers your dwelling, personal property and liability in the event of a covered loss. HO-3 coverage — also known as a special form homeowners insurance policy — is an open peril policy that covers the physical structure of your home against all perils (a cause of loss) except for those specifically excluded listed on your policy. 

Almost every home insurance company provides HO-3 coverage, though you will want to carefully study your homeowners policy to see exactly what is and isn’t covered. Find out more about what an HO-3 policy provides by reading our detailed guide below.


What is an HO-3 insurance policy — table of contents
  1. What does an HO-3 policy cover?
  2. What perils does an HO-3 policy protect against?
  3. What does an HO-3 policy not cover?
  4. HO-3 homeowners coverage: what to consider



What does an HO-3 policy cover?

An HO-3 insurance policy covers more than just your home and personal belongings. Have a look at the guide below to get a better sense of how this policy form can keep you and your assets protected.

Dwelling coverage

Your dwelling coverage extends to your home and any attached structures, covering them up to the replacement cost of the policy on an open peril basis. Refer to this list for the perils for which your dwelling won't be covered with an HO-3 policy. It’s important to note that the replacement cost and market value of your home are two very different amounts. The market value of your home includes the value of real estate and land. The replacement cost is only designed to rebuild your home in the event is it destroyed.


Other structures coverage

Any other structures — such as a detached garage or fencing — are typically covered at around 10% of your dwelling coverage limit.

Liability coverage

Much like auto insurance liability, homeowners liability insurance protects you if you’re found at fault for damages to someone’s property or for their bodily injuries. We recommend setting your personal liability coverage limits high in order to protect any assets you might have. Unlike your liability on your auto insurance policy, homeowners liability coverage tends to be fairly inexpensive.


Personal property

Personal property coverage includes your clothes, your furniture, your TV and other belongings. Your personal property is only covered in the cases of specifically listed incidents (named perils). If you are interested in an open peril policy for your personal belongings, you may consider looking into an HO-5 policy (or your insurer's equivalent).

Your personal property is typically covered at actual cash value or replacement value. Actual cash value factors in wear and tear when considering your payout, while replacement cost coverage will pay the full cost to replace your items. 

Sub-limits are important to consider when setting up personal belongings coverage. For valuable belongings, such as jewelry or fine art, the insurance provider may limit the amount of coverage for the homeowner. Below are common sub-limits.

Money, Gold, Coins
Jewelry, watches, furs
Watercraft, trailers
Business property
Business property

If the value of any of your belongings exceeds monetary sub-limits, consider additional coverage adding an endorsement or rider to your policy. This will increase the level of coverage for an entire category. For example, a jewelry endorsement would increase the level of jewelry coverage for all of your jewelry. If you have a very valuable piece of jewelry, such as an engagement ring, seek a scheduled endorsement as a coverage option.

A scheduled endorsement is specific to one item. This item will likely need to be appraised and will ensure you are properly covered in the event of a loss.

Additional living expenses

Sometimes referred to as loss of use, your additional living expenses coverage reimburses you for select expenses if your home is rendered uninhabitable after a covered loss. You are covered up to the policy limits.

Medical payments to others

Accidents happen. If a guest to your home injuries themselves on your property, your medical payments coverage will help with their medical costs up to your policy limit.

  • Medical bills and payments
  • Surgical costs
  • Cost of X-rays
  • Dental procedures
  • Ambulance and hospital fees
  • Nursing care
  • Prosthetic devices
  • Funeral services



What perils does an HO-3 policy protect against?

An HO-3 covers your home and personal property differently. The physical structure of your home and any other structures — fences or a detached garage — are covered in all circumstances except those specifically excluded. Because your home is a major investment, you should absolutely insure your dwelling on an open peril basis.

In the event of a claim, you only have to prove to your homeowners insurance company that one of the excluded perils did not cause the damage. In this sense, there is much less burden of proof. This can greatly expedite any claims process with your insurance carrier. Let’s further explore the different coverage options with an HO-3 policy.

Insurance Terminology

Property Covered Against

Home Contents Covered Against

HO 3 - Special Form

Open perils

Named perils


Open peril: covers your against all claims unless specifically stated. Typically, the following are excluded on an open peril policy:

  1. Freezing pipes and systems in vacant dwellings
  2. Damage to foundations or pavements from ice and water weight
  3. Theft from a dwelling under construction
  4. Vandalism to vacant dwellings
  5. Latent defects, corrosion, industrial smoke, pollution
  6. Settling, wear and tear
  7. Pets, other animals and pests
  8. Weather conditions that aggravate other excluded causes of loss
  9. Government and association actions
  10. Defective construction, design and maintenance

Named peril: your personal belongings are only covered against the threats specifically listed on the policy. The 16 typically covered perils include:

  1. Lightning or fire
  2. Hail or windstorm
  3. Damage caused by aircraft
  4. Explosions
  5. Riots or civil disturbances
  6. Smoke damage
  7. Damage caused by vehicles
  8. Theft
  9. Vandalism
  10. Falling objects
  11. Volcanic eruption
  12. Damage from the weight of snow, ice, or sleet
  13. Water damage from plumbing, heating, or air conditioning overflow
  14. Water heater cracking, tearing, and burning
  15. Damage from electrical current
  16. Pipe freezing


What does an HO-3 policy not cover?

Although very popular, HO-3 policies come with a downside: named-peril coverage for personal property. While you remain covered against many perils, you also have a burden of proof to show the damage was caused by one of the covered claims. Depending on the type of claim and individual circumstances, this can slow the claims process.


Additional HO-3 policy exclusions

There are some extra exclusions we should mention. Floods and earthquakes are two of the most common perils that many insurers won't cover. In most cases, homeowners looking for protection against these perils will need to seek out a separate earthquake or flood insurance policy.

Have a look at the list below to see the perils that are commonly excluded from any home insurance policy.

  • Flood
  • Hurricane
  • Mold*
  • Vandalism to vacant dwellings
  • Wear and tear
  • Property damage caused by pets
  • Earthquakes**
  • Enforcement of building codes and similar laws
  • Intentional acts
  • Neglect
  • Government acts

*Some policies allow you to add limited coverage for mold damage.

**You can add earthquake insurance via your insurance provider, if applicable.



HO-3 homeowners insurance coverage: what to consider

HO-3 policies are among the most common for homeowners in the US. An HO-3 covers your home’s structure against all perils excluding the ones specifically listed.

In general, the only downside to an HO-3 coverage is the named peril coverage for your personal property. This leaves your personal belongings vulnerable and puts the burden of proof on you in the event of a claim. If you’re worried about your personal property or wish for more robust coverage options, you may want to consider an HO-5 policy. This will cover both your personal belongings and your dwelling on an open-peril basis. This is the most comprehensive coverage available.

Remember that home insurance companies may differ in their coverage options and pricing. When shopping for HO-3 coverage — or any other type of coverage — it always pays to shop around. Insert your ZIP below to compare quotes and find the best cheap homeowners insurance for your budget and needs.


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About The Zebra

The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.

  • The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
  • The Zebra’s insurance editorial content is not subject to review or alteration by insurance companies or partners.
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