Today we will delve into what is called the HO-3 Homeowners Insurance Policy. Nationally, this has been one of the most widely used policy forms for home insurance for many years. When Texas was the only state writing coverage on the HOB Form, the other 49 states were mainly using the HO-3 Policy Form.
The HO-3 policy offers “Open Peril Coverage” on the dwelling, which means all risk coverage unless excluded, and “Named Peril Coverage” for contents. It is typically an excellent policy that includes replacement cost coverage, water damage coverage for sudden and accidental discharge of water and slow leak coverage, backup of sewer and drains, foundation coverage and more.
However, many companies have now begun to offer what I would call a HO-3 Modified, where they remove the slow leak coverage for water damage and limit the water damage coverage to sudden and accidental discharge of water. (ie: burst water heater). I have also seen other modifications that reduce the coverage significantly. Like every other coverage form, the HO-3 is no longer standard and can vary greatly from company to company.
Finally, some companies now offer what are called ”Company Specific Forms.” Which means just that. A particular company decides what they wish to cover, designs a policy to represent that, gets it approved by the states they do business in and offer that coverage for their homeowners insurance clients. Obviously, this would not be a standard form. However, most companies that use this generally mirror the coverage after a HO-3 policy or a HO-3 Modified Policy Form.
Most of the homeowners insurance policies being written today are either HO-3, HO-3 Modified or Company Specific Forms. Many choices and options are available and most of the policies offer good coverage. As long as you understand what coverage you are getting, you won’t be surprised at some point in the future.
