HO-3 Home Insurance Policy: What You Need to Know


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Key Takeaways

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HO-3 policies cover your home and other structures on an open perils basis, meaning you're protected from any cause of damage unless it's specifically excluded.

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Personal property is covered only for named perils, such as fire, theft or wind. Anything not listed won't be covered.

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The average annual cost of an HO-3 policy is around $1,989, though your rate will vary based on your home, location, and coverage levels.

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What Is an HO-3 Policy?

An HO-3 policy is the most common form of homeowners insurance. It covers your home and other structures on an open perils basis, meaning you're protected from any cause of damage unless it's specifically excluded.

Your belongings are insured on a named perils basis, so they're only covered if the damage is caused by events listed in the policy. For example, if a car crashes into your fence, the policy would cover the damage. But if your home is damaged by a sinkhole and sinkholes are excluded, the loss wouldn't be covered.

HO-3 Policy Coverage

With an HO-3 policy, your house and other structures are broadly protected against nearly all causes of damage, but your belongings are only covered for specific events. Here’s what an HO-3 policy typically includes:

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    Dwelling coverage (Coverage A)

    Pays to repair or rebuild your home if it’s damaged by anything not specifically excluded.

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    Other structures (Coverage B)

    Covers detached garages, sheds, fences and pools.

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    Personal property

    Covers your belongings, but only for named perils like fire, theft or vandalism. High-value items may need extra coverage.

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    Liability coverage

    Helps cover legal and medical costs if someone is injured on your property and you’re held responsible.

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    Loss of use

    Pays for temporary housing and related expenses if your home can't be lived in during repairs.

HO-3 Insurance: Named vs. Open Perils

HO-3 coverage splits into two types of protection: open perils for your home and other structures, and named perils for your personal property. This distinction affects what's covered, what's excluded and when you're stuck paying out of pocket.

Named Perils

Named perils coverage only applies to events specifically listed in your policy. If the cause of damage isn't named, it's not covered.

This type of coverage applies to your personal belongings under an HO-3 policy. Common named perils include:

  • Fire or lightning
  • Smoke
  • Explosions
  • Theft or vandalism
  • Hail or wind
  • Damage from vehicles
  • Falling objects
  • Freezing pipes (unless due to neglect)
  • Volcanic eruption
  • Riots or civil unrest

If a fire destroys your furniture, it's covered. But if your belongings are damaged by a flood or earthquake and those aren't listed, your policy won't pay for the loss.

Open Perils

Open perils coverage works in reverse: your home and structures are covered for all causes except those specifically excluded. This gives broader protection, but it still has limits. Common exclusions include:

  • Earthquakes
  • Floods and certain water damage
  • Power failure
  • Neglect or intentional damage
  • War or nuclear events
  • Government action (like property seizure)
  • Poor construction or defective materials
  • Sinkholes
  • Normal wear and tear

If the cause of damage isn't on the exclusion list, it's covered. For example, if a tree falls on your garage, the repairs would typically be covered.

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Standard HO-3 policies don't cover floods, earthquakes or high-value items beyond set limits. If you live in a high-risk area or own valuables like jewelry, you'll need separate flood, earthquake or scheduled personal property coverage to avoid large out-of-pocket losses.

HO 3 Policy: Average Cost

The average annual cost of an HO-3 policy among these major insurers is about $1,989, but your actual rate will depend on your dwelling coverage amount and personal risk factors. The table below shows the average cost of HO-3 policies based on state-specific dwelling coverage from insurers operating in at least 30 states.

Company Label
Premium for State-Specific Dwelling Coverage

1.

Allstate

$1,795

2.

Nationwide

$1,855

3.

USAA

$1,862

4.

Travelers

$1,929

5.

State Farm

$2,049

6.

MetLife

$2,057

7.

Chubb

$2,083

8.

Farmers

$2,283

The most accurate way to estimate your rate is to get a personalized quote. However, you can expect higher premiums if:

  • You live in a state with frequent storms or wildfires
  • Your home is older, has a wood stove, or a high replacement cost
  • You have a pool, certain dog breeds, or past claims
  • Your credit history is poor or your liability limits are high

HO3 Insurance Policy: How to Get It

Buying an HO-3 policy is straightforward, but comparing options can save you money and headaches later. The right insurer offers competitive pricing and strong support when you need to file a claim.

  1. 1

    Decide how much coverage you need

    Start by estimating your home's replacement cost and determining how much personal property, liability and loss-of-use coverage you want. You'll also need to choose a deductible, which is the amount you pay out of pocket before coverage kicks in.

  2. 2

    Gather key information about your home

    Insurers will ask about your home's age, roof type, construction materials, safety features and any potential risks, like a wood stove or swimming pool. Having this ready speeds up the quote process.

  3. 3

    Compare quotes from multiple insurers

    Shop around and get quotes from at least three companies, including both national brands and local providers. You can start by checking out the best companies for homeowners insurance.

  4. 4

    Check insurer ratings and complaint data

    Beyond price, look up customer satisfaction and complaint scores from sources like J.D. Power, the NAIC and the BBB. A low premium isn't worth it if the claims process is slow or unhelpful.

  5. 5

    Ask about available discounts

    Many insurers offer discounts for bundling home and auto, installing security systems or going claims-free. When comparing homeowners insurance quotes, don't forget to factor these savings into your decision.

HO-3 Homeowners Insurance Policy: Bottom Line

An HO-3 policy protects your home, belongings and liability with a balance of broad and named perils coverage. It's the most common form of homeowners insurance and often required if you have a mortgage.

To get the right policy, focus on coverage that reflects your home's risks, not just the cheapest quote. Comparing insurers, checking exclusions and reviewing customer service ratings can help you avoid headaches when it matters most.

HO3 Insurance: FAQ

Here are common questions about HO-3 homeowners insurance policies, including what they cover, how they compare to other types and when you might need extra protection.

Is an HO-3 policy the same as standard homeowners insurance?

What’s the difference between HO-3 and HO-5 policies?

Does an HO-3 policy cover floods or earthquakes?

Are my valuables fully covered under an HO-3 policy?

Can I switch to an HO-5 policy later?

HO 3 Insurance Companies: Our Review Methodology

MoneyGeek evaluated homeowners insurance companies using premium data and analysis from Quadrant Information Services. We based our insights on thousands of rate filings from insurers across the U.S., allowing us to provide accurate comparisons grounded in real-world pricing.

We used a sample homeowner profile with a good credit score (769 to 792), a wood-frame house built in 2000 and a composite shingle roof for consistency. Standard quotes reflected $250,000 in dwelling coverage, $125,000 in personal property, $200,000 in liability and a $1,000 deductible.

We also analyzed policies with $1 million in dwelling coverage, $500,000 in personal property and $1 million in liability to assess coverage options for higher-value homes.

What is HO3 Insurance: Related Articles

About Mark Fitzpatrick


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Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.

Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!

Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.


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