What is HO-3 Insurance?

What is HO-3 Insurance?

If you buy a house, then you need to buy homeowner’s insurance. There are several kinds of homeowner’s insurance policies with different coverages and limits.

HO-3 insurance is probably the most commonly bought kind of homeowner’s policy. HO-3 policies are sometimes called ‘standard homeowner’s policies’ and give your home and belongings a good mix of protections. HO-3 policies will protect your dwelling from all damages that are not explicitly excluded from the agreement. In contrast, HO-3 policies will only cover personal possessions from damages that are explicitly included in the agreement.

HO-3 insurance plans are only for homeowners that live in the insured property. If you rent out the home or do not live in it as your primary residence, then you will need an alternate homeowner’s policy.

What Does an HO-3 Cover?

HO-3 policies will cover your dwelling (physical structure of your house) and your personal possessions.

HO-3 policies cover your dwelling on an open peril policy. This means that your physical dwelling will be insured from damage from all possible perils, except for those that are specifically excluded from your insurance agreement. Common perils that are excluded from HO-3 policies include earthquakes, floods, seizure by the government, or any changes to bring your house to code.

Conversely, HO-3 policies protect your personal possessions on a named peril basis. This means that an Ho-3 policy only covers personal possessions from damages explicitly named in the insurance agreement. In general, there are 16 named perils, which include:

– Civil unrest
– Fire & lightning
– Explosions
– Aircraft damage
– Smoke damage
– Falling objects (trees, rocks, etc)
– Hail/windstorm damage

And more. Sometimes, you can modify an HO-3 policy to cover your possessions on an open peril basis. You can also buy individual endorsements to cover your property from other perils such as theft or intentional vandalism.

In addition to dwelling and property protection, HO-3 policies also give you a modicum of liability insurance and medical payment coverage. This means that an HO-3 policy will help pay for any damages, legal fees, and medical costs if anyone is hurt on your property.

Most HO-3 policies also have provisions for extra living expenses. If you are put out of your home because of a covered peril, then an HO-3 policy will often cover any additional living expenses you accrue, up to a certain limit.

Is an HO-3 Policy a Good Idea?

Yes, if you are a homeowner, then an HO-3 policy is a good idea. HO-3 policies are considered the standard homeowner’s policy and they are probably the most common kind of insurance. HO-3 policies are popular because they offer a decent mix of protection for your dwelling and personal property.

In fact, many lenders will not approve a mortgage unless you have an HO-3 policy or something equally comprehensive. In rare cases, you may be able to get a mortgage with an HO-1 or HO-2 policy. So an HO-3 policy is almost always the best idea for a homeowner.

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