What Is HO3 Insurance Coverage?

HO3 insurance coverage insures an owner-occupied home, private structures related to it, personal property on and off the premises, and loss of use, according to the International Risk Management Institute. The policy also covers personal liability and medical payments. HO3 is the most common and most popular form of homeowners insurance, according to the National Storm Damage Center. An HO3 policy is an open perils policy, which means it covers everything that it does not specifically exclude from coverage.

Typical exclusions on an HO3 policy include building code enforcements, earthquakes, floods, power failures and homeowner neglect of the property, notes the National Storm Damage Center. The HO3 provides a hybrid coverage using both named perils and open perils coverage. While the HO3 policy protects the home on an all-risk or open perils basis, the policy usually covers personal property within the home on a named perils list. An HO5 premium homeowners policy covers both the home and personal property using the broader all-risk coverage.

If certain conditions apply, the HO3 policy pays losses to the home and related structures based on replacement cost without deducting depreciation, explains the International Risk Management Institute. The policy pays personal property losses on an actual cash value basis, unless an endorsement amends the terms.