What Is HO-3 Insurance and Do You Need It?

HO-3 insurance is the most common type of homeowners insurance, but what does it mean? Here's what you should know.
Written by Brady Klopfer
Reviewed by Carrie Adkins
Purchasing insurance can feel like a daunting task. Whether you’re purchasing life insurance, health insurance, car insurance, or homeowners insurance, it always feels like a hard and serious process to find the policy that’s perfect for you, with the coverage you need at the price you can afford.
That’s doubly true with homeowners insurance. Your home is an extremely valuable thing to protect, and there are
a lot of things that can cause damage to it
. As a result, there are a lot of different types of homeowners insurance policies to choose from.
The most common one is called HO-3 insurance. If you’re shopping for homeowners insurance, then you’ve likely run across this term. But what is HO-3 insurance? What does it mean, and is it right for you? Before making a policy decision, you need to be informed. So, here's everything you need to know about HO-3 insurance. And remember, you can always find a great deal on HO-3 by bundling
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and home insurance with
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What does HO-3 stand for?

Let’s start with the name. The "HO" in "HO-3" simply stands for "homeowners." And the "3" is just a number for classification. In other words, HO-3 is the third type of homeowners insurance. There’s also an HO-1 and HO-2, among other types of homeowners insurance.

What is HO-3 insurance?

HO-3 insurance is the most common type of homeowners insurance on the market. If you were to purchase the standard homeowners insurance policy from your insurance agent, it would be a variation of an HO-3 insurance plan.
This type of plan is often referred to as an open perils policy. What that means is that an HO-3 insurance plan covers your home from all perils except ones that are specifically excluded in your policy. This is a big difference from HO-1 and HO-2 plans (often referred to as named perils policies) which only cover perils that are specifically listed.
So instead of only protecting your home from a few things, an HO-3 insurance plan protects your home from everything except a few things. That’s a big difference that results in your home being much more protected.
However, with an HO-3 insurance plan, your personal property will only be covered as named perils. In other words, your plan will specify which events protect your personal property. There will be many perils where your home is covered, but your personal property is not.
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What does an HO-3 insurance policy cover?

Because an HO-3 insurance plan is an open perils policy, it covers everything except for a few perils. In general, an HO-3 plan will cover your home from all of the most common types of perils, including wind, water damage, ice and snow damage, fires, lightning damage, and theft.
MORE: What are the cheapest companies for home insurance?

What does an HO-3 insurance policy not cover?

An HO-3 insurance plan will list a few perils that are not covered if they damage your home. These can change from policy to policy, but usually include things like earthquakes, landslides, government seizure, off-site loss of power, and homeowner neglect.

Is an HO-3 insurance plan right for you?

Every homeowner has a different equation for what they need in homeowners insurance. HO-3 insurance is not the most comprehensive policy available, but it does cover a lot, and it covers a dwelling very well. It’s the most common type of homeowners insurance because it provides a lot of coverage for the most important elements of homeowners insurance, while keeping premiums fairly low.

What to do before purchasing HO-3 insurance

If you think that HO-3 insurance is right for you and your home, then you should have a conversation with your insurance agent. You want to make sure that you are fully aware of what is (and even more importantly, isn’t) covered under your HO-3 plan. Sometimes the open perils in an HO-3 insurance plan can be negotiated, so make sure you work with the insurer to get the plan that’s perfect for you.
HO-3 insurance is the most popular type of homeowners insurance, so it just might be right for you and your house, apartment, or condo.
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