What Is an HO-3 Homeowners Insurance Policy?

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HO-3 homeowners insurance policies include six coverage areas: dwelling, personal property, other structures, loss of use, personal liability, and medical payments. This insurance covers a loss unless it is caused by a peril specifically excluded, such as an earthquake or flooding.

Definition and Examples of HO-3 Homeowners Insurance Policy

HO-3 homeowners insurance is the most common type of homeowners insurance, covering all risks except those that are named in the policy.

  • Alternate name: Special Form policy

Different homeowners insurance forms, such as HO-1, HO-2, and HO-3 policies, have different levels of coverage and correspondingly higher or lower premiums. An HO-3 homeowners insurance policy includes six different coverage sections:

  • Dwelling: Covers damage to your dwelling
  • Other structures: Covers damage to other structures on your property such as a garage or shed
  • Personal property: Covers damage to personal possessions such as electronics, furniture, or appliances
  • Loss of use: Provides living expenses if your dwelling becomes uninhabitable temporarily
  • Personal liability: Covers financial loss if you are sued by someone injured on your property
  • Medical payments: Covers the medical care expenses if someone is injured on your property

HO-3 insurance policies are “open peril” policies, meaning they cover all risks except the ones specifically named. Coverage for personal content follows a “named peril” policy, meaning only the named perils are covered.

So, for example, if your home was damaged by a fire, your HO-3 coverage could pay for the costs to repair your home and replace any personal possessions. It can also help you pay for a place to live if your home is uninhabitable while it’s being repaired. However, if your home was damaged by a flood, and floods were named as an exclusion in your HO-3 policy, you would not receive coverage.

How HO-3 Homeowners Insurance Policies Work

HO-3 homeowners insurance, the standard homeowners insurance policy, provides a range of coverage, but you can also customize these policies to a degree. You may include riders or add-on coverages.


In contrast to HO-3 coverage, HO-1 and HO-2 policies name the specific risks that are covered, such as theft, lightning, windstorm, or fire. HO-2 insurance covers more perils than HO-1 insurance, and the more perils your policy covers, the higher your premium.

When you experience a loss or someone is injured on your property, you’ll inform your insurer by submitting a claim. The insurance company will either assess damages or require documentation to proceed with the claim. If the damage or costs are lower than your deductible, you’ll pay out-of-pocket instead of submitting a claim.

If your HO-3 insurance policy contains exemptions such as flood or earthquake, you wouldn’t be eligible to submit a claim for damage caused by those perils. Any other non-excluded perils, however, would be eligible.

An insurance agent can help you determine the ideal type of coverage for your situation. For example, if you have a lot of high-value jewelry, they may recommend additional coverage for personal property. If you have high-value structures on your property besides your home, you may want more robust coverage for other dwellings.

Let’s look in more detail at the different coverage areas with an HO-3 homeowners insurance policy.

Dwelling Coverage

Dwelling coverage protects the main structure and systems of your home. If covered perils caused substantial damage to your home and you needed to repair it or rebuild it entirely, the dwelling coverage limit is typically aligned with the expected cost of rebuilding the home.

Other Structures Coverage

Other structures coverage protects structures on your property that aren’t your primary dwelling, such as a standalone garage, shed, or fence. While you can request a custom quote, many insurers will quote you a premium based on coverage up to 10% of your dwelling coverage limit.

Personal Property Coverage

With personal property coverage, the policy names the perils that are covered to protect your possession such as clothes, jewelry, or the contents of your home. A common limit for personal property coverage is 50% of your dwelling coverage limit.

Personal Liability Coverage

If you are in a situation where you’re considered personally and legally liable for either bodily injury or property damage to someone else, personal liability coverage pays up to a certain limit, such as $100,000.

Loss of Use Coverage

Loss of use coverage pays for the costs of living somewhere else if you home is uninhabitable. It’s typically granted for the duration of a repair or up to a limit. It provides for expenses such as housing, meals, or warehouse storage.

Medical Payments Coverage

This is an additional coverage related to any bodily injury that happens on your property, but is specifically targeted at paying medical bills for anyone injured on your property. This coverage has standard limits, but you typically can request a customized policy with higher or lower coverage for medical payments.

Do I Need an HO-3 Homeowners Insurance Policy?

An HO-3 policy is the most common form of homeowners insurance. If you have paid off your mortgage, you may consider a lower-cost HO-1 or HO-2 policy that provides a basic level of coverage to protect you from common perils. However, if you have a mortgage on your property, you’ll likely be required to have a certain amount of coverage, which will be an HO-3 policy.

What Does a HO-3 Homeowners Insurance Policy Mean for Your Home Coverage?

An HO-3 homeowners insurance policy coverage includes six areas: dwelling, personal property, other structures, loss of use, personal liability, and medical payments. Insurers may have different coverage amounts and terms, so consider comparing quotes.

Key Takeaways

  • An HO-3 policy is the most common type of homeowners insurance policy and typically is called the Special Form.
  • HO-3 coverage insures against loss or damage on all perils except those specifically excluded.
  • HO-3 policies include six areas of coverage: dwelling coverage, other structures, personal property, personal liability, loss of use, and medical payments.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. National Association of Insurance Commissioners. “A Consumer's Guide to Home Insurance.”

  2. Commonwealth of Massachusetts, Division of Insurance. “A Massachusetts Guide to Understanding the Insurance Policy Covering Your Home.”

  3. California Department of Insurance. “Residential Insurance: Homeowners and Renters.”

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