Your home and things · HO-3, HO-5, HO-2, HO-8
Homeowners insurance
Pays to repair or rebuild your house and replace your belongings after sudden damage like a fire or a burst pipe, and protects you if someone is hurt and blames you.
- Who it's for
- People who own and live in a house. Most policies are an HO-3; the other forms are compared below.
- Is it required?
- Not by law. Your mortgage lender requires it until the loan is paid off. Lenders that are federally regulated or backed also require flood insurance if the house is in a high-risk flood zone.
Covered and not covered
Usually covered
- Sudden damage to the house from fire, wind, hail, lightning, a burst pipe, a fallen tree, and any other cause that isn't excluded
- Your belongings, if damaged by one of the 16 named perils, including theft, at home or anywhere else
- Hotel and other extra costs while you can't live in the house after covered damage
- Claims against you if you, your family or your pet hurt someone or damage their things, at home or away
- Small medical bills for guests hurt at your place, whoever was at fault
Usually not covered
- Flood, meaning water rising from outside, including storm surge. You need a separate flood policy.
- Earthquake and other ground movement. You need a separate earthquake policy.
- Wear and tear, rot, rust, and anything caused by poor maintenance
- Slow leaks that go on for weeks or months, and the mold that follows
- Sewer or drain backup, unless you add water backup coverage
- Termites, rodents and other pests
- Your car, which auto insurance covers, and most business equipment and business activities
- Injuries to you and your household, which health insurance covers
Real-life examples
A pipe bursts in January and water pours into the kitchen.
Usually coveredSudden water damage from inside the house is covered: Coverage A pays for floors and cabinets, Coverage C for your belongings. The broken pipe itself usually isn't. If the pipe froze because you left the house unheated, the claim can be denied.
Heavy rain makes a creek overflow and water fills your basement.
Usually not coveredThat is flood, and a home policy excludes it however much damage it does. Only a separate flood policy pays.
A tree falls on the roof during a windstorm.
Usually coveredRepairs to the house are covered, and so is removing the tree from it. A tree that falls without hitting anything is usually only removed if it blocks your driveway, up to a small amount.
Your roof leaks because the shingles are 25 years old.
Usually not coveredOld age and wear aren't covered. If a storm had torn shingles off, the storm damage would be.
Your laptop is stolen from your car.
Usually coveredBelongings are covered away from home too, minus your deductible. The broken car window falls under your car's comprehensive coverage instead.
A guest slips on your icy front steps and breaks a wrist.
Usually coveredCoverage F can pay small medical bills right away, whoever was at fault. If they sue, Coverage E pays your legal defense and any amount you're found to owe, up to the limit.
The six parts of a homeowners policy (A to F)
Your declarations page lists a limit for each part. Open one to see what it means.
ADwellingThe house itself
The structure and everything built into it: roof, walls, floors, built-in cabinets, plumbing, wiring, and an attached garage.
In an HO-3 it's open perils: every cause of damage is covered unless the policy excludes it.
Set this limit at what it would cost to rebuild the house, not what you paid or what it would sell for. Land isn't included, because land doesn't burn.
Example: A kitchen fire destroys the cabinets and blackens the ceiling. Coverage A pays to repair them.
BOther structuresDetached garage, shed, fence
Buildings and structures on your property that aren't attached to the house. Usually set at 10% of Coverage A.
Structures you rent out or use for a business are usually excluded.
Example: A windstorm flattens 60 feet of fence.
CPersonal propertyYour belongings
Furniture, clothes, electronics, kitchenware, bikes. Covered at home and while traveling.
In an HO-3 this is named perils: only the 16 listed causes are covered. Accidentally dropping your TV isn't one of them.
Usually 50 to 70% of Coverage A. Watch the sublimits: cash is often capped around $200, jewelry theft around $1,500. Check whether it pays replacement cost or actual cash value.
Example: A burglar takes a TV, a laptop and a bike. You list them, with receipts or photos if you have them, and are paid up to the limit minus the deductible.
DLoss of useLiving costs while you can't live there
Pays the extra cost of living elsewhere after covered damage: rent, a hotel, and meals above your normal grocery bill. It doesn't pay costs you'd have anyway, like your mortgage.
Example: A fire makes the house unlivable for three months. The policy pays for a rental apartment and the extra cost of eating out.
EPersonal liabilityIf you're blamed for harm to others
Pays other people's claims, and your lawyers, if you or your household are legally responsible for injuring someone or damaging their property. Usually $100,000 to $500,000.
It follows you anywhere, not just at home. It doesn't cover car accidents, business activities or harm you meant to cause.
Example: Your dog knocks over a cyclist, who sues for medical bills and lost wages.
FMedical payments to othersA guest's small medical bills
Pays a guest's medical bills if they're hurt at your place or by your pet, whoever was at fault. Usually $1,000 to $5,000. It often settles things before anyone thinks about suing. It never pays for you or your household.
Example: A friend's child falls off your swing set and needs stitches.
HO-3, HO-5 and the other forms
The "HO" number tells you the form the policy is based on. The main difference is whether damage is covered by named perils (only listed causes) or open perils (any cause not excluded).
| Form | Made for | The house | Your belongings |
|---|---|---|---|
| HO-2 (broad) | Owners wanting a cheaper policy | Named perils | Named perils |
| HO-3 (special) | Most owners. The most common form | Open perils | Named perils |
| HO-5 (comprehensive) | Owners wanting the broadest cover | Open perils | Open perils |
| HO-8 (modified) | Older homes that would cost far more to rebuild than they're worth | Basic named perils, often paid at actual cash value | Basic named perils |
| HO-4 | Renters | Not included | Named perils |
| HO-6 | Condo owners | Your unit's interior | Named perils |
These are the standard forms most insurers base their policies on. Insurers change the wording, so two HO-3 policies can differ. Mobile homes use their own forms.
Good to know
How much dwelling coverage do I need?
Enough to rebuild the house from the ground up at today's labor and material prices. That can be more or less than the market price. Ask whether your policy has "extended replacement cost", which adds 20 to 50% on top if rebuilding costs spike after a disaster.
Separate deductibles for wind, hail and hurricanes
In storm-prone states, policies often have a separate hurricane or wind deductible set as a percentage of Coverage A. On a $400,000 house, a 2% hurricane deductible means you pay the first $8,000.
Jewelry, art and other valuables
Theft of jewelry is usually capped at around $1,500 in total. To cover an engagement ring or a collection properly, list it as scheduled personal property with an appraisal. Scheduled items are often covered for simply losing them, too.
Working or running a business from home
Home policies cover very little business property (often $2,500 at home) and no business liability. A client tripping on your stairs or a stolen work laptop may not be covered. Ask about a home-business endorsement or a business owner's policy.
Older roofs and hail
Many policies now pay older roofs at actual cash value, or exclude cosmetic hail damage like dents that don't cause leaks. Look for a roof endorsement on your declarations page.
If no insurer will cover you
In high-risk areas, private insurers may decline a home. State FAIR plans, Citizens in Florida, and state wind pools offer basic coverage as a last resort. It is often narrower and more expensive, so compare what it leaves out.
Small claims and your insurance record
Claims, even small ones, are recorded in a shared industry database (CLUE) and can raise your premium or lead the insurer not to renew. Check your policy's rules on reporting before deciding not to report something.
Rebuilding to current building codes
After a big loss, the city may require upgrades like new wiring or a sprinkler system. Standard policies pay only a little toward that, often 10% of Coverage A. Ordinance or law coverage raises it.
Check your own policy
Find these on your policy or declarations page, or ask your agent:
- Which form it is: HO-3, HO-5 or another
- Coverage A: would it rebuild the house at today's prices?
- Whether belongings are paid at replacement cost or actual cash value
- Your deductible, and any separate wind or hurricane deductible
- Whether water backup coverage is included
- Sublimits for jewelry, electronics, bikes or collections
- Your liability limit, and whether an umbrella policy would make sense
Not sure where to look? See how to read your policy.