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

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.

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:

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 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 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.

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.

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

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.

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.

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.

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.