Does special HO-3 homeowners insurance cover flood damage

An HO3 policy is the one of the most common types of home insurance. The coverage is written on an open-perils basis for your home and other structures, which means it can cover any risks except for those specifically excluded in the policy. However, it offers named-perils coverage for your personal property, meaning it only covers damage to belongings caused by the events listed in your policy.

These policies are usually intended for the single-family homes, multi-family homes, and townhouses. The property owner must live in the home and not rent any part of it.

What Homeowners Need to Know about HO3 Policies

The first thing to know is home insurance is written on a variety of forms. These forms standardize coverage from insurance company to insurance company. Which form your agent uses for your home depends largely on how much coverage you need.

HO3 is typically used for owner-occupied homes because it offers reliable, affordable coverage for common risks.

HO3 policies typically pay for:

  • Damage to the home (Coverage A).
  • Damage to other structures on your property, like fences or detached garages (Coverage B).
  • Damage to or theft of personal belongings, like clothes, furniture, etc (Coverage C).
  • Additional living expenses when a covered claim keep you from living at home (Coverage D).
  • Legal expenses when you or a household member is sued over someone’s injuries or property damage (Coverage E or personal liability).
  • Medical payments when guests are injured at your home (Coverage F).

What Perils Are Covered in an HO3 Policy?

For your home and other structures, HO3 is an open-perils policy. That means your insurance company can pay for damage to your home unless it’s caused by an event listed in the policy as an exclusion. Some common HO3 policy exclusions are:

  • Earth movement, such as an earthquake, sinkhole, and mudflow.
  • Water damage from flood, sewer backup, or water seeping in through the foundation.
  • Demolition of your home required by law to bring it to code.
  • Seizure or demolition by a government agency or public authority.

But coverage for the contents of your house is different. HO3 policies insure your personal property on a named-perils basis, meaning your insurer only pays for damage caused by events listed in the policy. Those named perils are usually the same 16 listed on an HO2 policy:

  • Fire or lightning
  • Hail or windstorms
  • Explosions
  • Riots or civil commotion
  • Damage from aircrafts
  • Damage from vehicles
  • Smoke
  • Malicious mischief or vandalism
  • Theft
  • Volcanic eruptions
  • Falling objects
  • Weight of ice, snow, or sleet
  • Accidental discharge of water or steam
  • Sudden and accidental tearing apart, cracking, burning, or bulging of certain household systems
  • Freezing of household systems
  • Sudden and accidental damage from artificially generated electrical current

You can get open-perils coverage for your personal belongings by adding an endorsement to your policy.

You could also schedule your valuable items. Scheduled property is an insurance term that means your items are individually listed in the policy along with the amount of coverage each gets. When property is scheduled, an HO3 policy insures it on an open-perils basis.

HO3 and the Magic of Replacement Cost Coverage

One of the big benefits of an HO3 policy is that it offers replacement cost coverage for your home and other structures. Some HO3 policies default to insuring personal belongings for their replacement cost; others require you to add that on.

Instead of only paying out the depreciated value of your home or other structures like an actual cash value policy, replacement cost coverage pays what it really costs to replace or rebuild with similar, new items today.

Put another way: you’ll actually have the funds you need to buy new replacements and rebuild your home after a loss.

How to Get an HO3 Insurance Policy

You’ve come to the right place! Kin Insurance offers HO3 policies. Just submit your address in the form below, and we’ll help you find quality coverage for your home.

If you own a condo or rent our your property, we can help with that, too. Check out our condo insurance and landlord insurance.

An HO-3 policy only covers personal property for named perils, while an HO-5 policy covers personal property for open perils. In simple terms, this means an HO-5 insurance policy is more comprehensive and covers damage to your personal property in all cases, except damage specifically excluded from your policy.

Does special HO-3 homeowners insurance cover flood damage

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Last Updated: 5/11/2022

Advertising & Editorial Disclosure

Buying a home is often the most significant purchase of your life, and it’s important to make sure that your home and its contents are insured. Both HO-3 and HO-5 homeowners insurance policies cover your home, but there are a few essential differences between the two regarding personal property.

The main difference between HO-3 and HO-5 homeowners insurance policies comes down to personal property. An HO-3 homeowners policy covers your personal property only if damaged by a cause named on your policy. In addition, HO-3 policies typically cover your property’s cash value but not necessarily the replacement cost. In some cases, you can add additional coverage to an HO-3 policy.

An HO-5 homeowners policy covers all damage to your personal property except for damages explicitly excluded from your policy. This might be a good option if you have more valuable personal property since it’s a more comprehensive coverage type. An HO-5 policy covers the replacement cost of your items, not just the cash value.

Peril can refer to a wide variety of causes when it comes to personal property damage. “Named perils” are causes specifically named in your HO-3 insurance policy. Examples of named perils vary from policy to policy but often include theft, fire, smoke and vandalism. “Open perils” mean that you have coverage for all causes when it comes to your personal property, except for perils explicitly excluded from your policy.

Your home typically has open peril dwelling coverage with both HO-3 and HO-5 homeowners insurance policies, so any damage to your home is covered unless it’s excluded from your policy. For example, if your insurance policy excludes mold damage, you wouldn’t be able to file a claim for damage caused by mold in your home, but you would be able to file a claim for any other kind of damage, including fire, smoke, vandalism or other causes.

HO-3 homeowners insurance policies cover personal property on a named peril basis, which means that damage to your property is only covered if named on your policy. HO-5 policies cover personal property on an open peril basis, so this coverage is more comprehensive and covers all damage to your personal property except for excluded damages.

HO-3 policies reimburse you for damaged property based on the property’s ACV or actual cash value. For example, if you have a five-year-old laptop, its actual cash value would be less than the sticker price because it has depreciated over time. In contrast, HO-5 policies reimburse you based on the RCV or replacement cost value of your property. This means that your insurance policy will pay you enough to replace damaged property, regardless of depreciation.

Because HO-3 homeowners insurance is less comprehensive, you’ll only be eligible to file a successful claim if a named peril has damaged your property. When you file your claim, you’ll need to provide specific evidence about how your property was damaged. Because HO-5 homeowners insurance is more comprehensive, you’ll most likely receive automatic reimbursement for your personal property damage.

Does special HO-3 homeowners insurance cover flood damage

Ensure you are getting the best rate for your coverage. Compare quotes from the top insurance companies.

Choosing between HO-3 and HO-5 insurance policies largely depends on your particular circumstances, including where you live, the value of your personal property and whether or not HO-5 coverage is available in your area.

If you have a lot of valuable personal property and live in an area where coverage is available, you might want to consider an HO-5 policy. They’re often not that much more expensive than a typical HO-3 policy and can help protect your property in a wide variety of situations. While the cost of an HO-5 insurance premium may be slightly higher, it can help save you money in the long run.

If you don’t have much valuable personal property, an HO-3 policy will probably meet your needs. While HO-3 policies aren’t quite as comprehensive as HO-5 policies, they still provide adequate coverage in many cases. If an HO-5 policy isn’t available where you live, you can also opt to include extra coverage with your HO-3 policy for an additional cost.

HO-3 policies include dwelling coverage and also usually cover many types of common personal property damage, including damage caused by fire, smoke, hail, lightning, vandalism, snow and more. HO-5 expands upon the personal property coverage offered by HO-3 policies and covers damage to personal property in pretty much all cases except excluded perils. Some types of damage that both HO-3 and HO-5 policies typically don’t cover include:

  • Flood damage
  • Mold
  • Earthquakes
  • Pollutants
  • Insect or animal damage
  • Wear and tear

In addition to homeowners insurance, you may want to purchase additional coverage not typically included under these policies, such as hazard, flood and earthquake insurance. While insurance coverage is a great first step to protect your home from potential damage, you should also be sure to develop an emergency preparedness plan in case of natural disasters or other hazards.

The average annual homeowners insurance policy in the United States costs $1,979 annually or $175 per month, according to MoneyGeek's study of policies across the country. Costs can vary widely depending on a number of factors, including where you live, your home’s value and how much coverage you opt for. HO-3 policies are typically less expensive than HO-5 policies since they offer less comprehensive coverage. However, HO-5 policies might not be that much more costly, depending on your circumstances. Because HO-5 policies provide broader coverage, they may save you money in the long run because they cover more claims.

If you’re looking for homeowners insurance coverage for your home, we’ve ranked the best homeowners insurance companies to help you decide. As always, when shopping for insurance products, you should be sure to compare home insurance quotes to make sure you’re getting the best deal possible.

Ensure you are getting the best rate for your coverage. Compare quotes from the top insurance companies.

About the Author

Does special HO-3 homeowners insurance cover flood damage


Margaret Wack is a freelance writer who covers insurance, saving, investing, banking, and more. Margaret earned a bachelor's degree in classics, comparative literature, and poetry from Smith College and a master's degree from St. John's College.