HO-3 Policy for Homeowners

For people who own their home, the HO-3 is a comprehensive insurance policy that provides coverage for dwellings and personal property.

The policy may be amended or endorsed to cover additional risks such as increased limits for more valuable items or a home-based business.

The HO-3 pays full replacement cost without depreciation provided insurance is adequately maintained.   Replacement value is the cost of construction and therefore should not be confused with market value.   Insurance companies and agents can assist you with cost estimates that will help you determine the replacement value of your property.

In addition, this policy protects owners and members of the household against legal liability claims for bodily injury and property damage.   The insurance company will also provide legal defense for most lawsuits brought against you.   If medical payments coverage is included, the company will pay for the medical expenses of others, up to a stated amount, for injuries that occur on your property, whether or not you are liable for the injuries.   This is commonly known as “goodwill” coverage.

If  your home is damaged or destroyed by fire or other insured hazards, making it unfit for habitation, the policy provides coverage for increases in necessary living expenses so your household can maintain its normal standard of living.  With the emotional trauma that can accompany such an event, it is comforting to know that this option exists.


Similar coverage to that described above is also available to tenants and owners of condominiums and town homes.

Since a tenant often has little “insurable interest” (or financial interest in the dwelling), only furnishings, personal property and personal liability are protected.   Owners of condominiums and town homes are also provided protection for their dwellings, above and beyond that provided by their homeowners associations.