HO-3

What does "HO-3" mean in real estate?

HO-3 stands for Homeowners Form 3 and is the most common homeowners insurance policy in the U.S. If you're asking, "What does 'HO-3' mean in real estate?" — it refers to a broad, owner-occupied single-family homeowners policy that protects the dwelling, other structures, personal property, liability, and additional living expenses after covered losses.

Key features of an HO-3 policy

• Dwelling coverage (Coverage A): Covers the structure (walls, roof, foundation) on an open-peril or "all-risk" basis — losses are covered unless specifically excluded (common exclusions: flood, earthquake).
• Other structures (Coverage B): Protects detached structures like garages, sheds, and fences.
• Personal property (Coverage C): Covers belongings (furniture, electronics, clothing) on a named-peril basis — only perils listed in the policy (fire, theft, vandalism, etc.) are covered.
• Loss of use (Coverage D): Pays temporary living expenses if your home becomes uninhabitable due to a covered loss.
• Personal liability (Coverage E): Protects you if someone is injured on your property or you accidentally damage someone else's property.
• Medical payments (Coverage F): Pays medical bills for guests injured on your property, regardless of fault.

Real-world examples

• Fire damage to the home: An electrical fire damages the kitchen and living room. Coverage A pays to repair or rebuild the structure; Coverage C covers damaged appliances and furniture because fire is a named peril.
• Theft of personal belongings: A burglar steals a TV and laptop. Coverage C reimburses replacement cost up to policy limits since theft is a named peril.
• Liability for guest injury: A guest slips on a wet bathroom floor and sues. Coverage E handles legal defense and settlement costs; Coverage F may cover immediate medical bills.
• Storm damage to the roof: Hail and wind damage the roof. Coverage A typically pays for roof repair or replacement; Coverage B may cover damage to a detached garage or fence.
• Temporary living expenses: A house fire makes the residence uninhabitable for weeks. Coverage D pays for hotel, meals, and other reasonable living expenses during repairs.

Common exclusions

HO-3 policies are broad but not all-inclusive. Typical exclusions include:

• Flood damage — requires a separate flood insurance policy.
• Earthquake damage — requires a separate earthquake policy or endorsement.
• Wear and tear, neglect, or lack of maintenance.
• Sewer or drain backups — often require a separate endorsement.

Why HO-3 matters in real estate

• Mortgage requirement: Lenders usually require homeowners to carry an HO-3 policy to protect their investment.
• Financial protection: Provides coverage for major risks that could otherwise cause significant financial loss.
• Customizable: You can add endorsements (riders) for additional risks like flood, earthquake, or sewer backup to tailor protection to your property and location.

Quick checklist when reviewing an HO-3 policy

• Confirm whether dwelling coverage is replacement cost or actual cash value.
• Check personal property limits and whether high-value items (jewelry, collectibles) need scheduled coverage.
• Verify liability limits and consider increasing them if you have significant assets.
• Ask about common endorsements for your area (flood, earthquake, sewer backup).

Conclusion

HO-3 is the standard, broadly protective homeowners policy for single-family, owner-occupied homes. It combines open-peril coverage for the structure with named-peril protection for personal belongings, plus liability and living-expense coverage. Understanding what an HO-3 covers and what it excludes helps homeowners pick the right protections and add endorsements where necessary.