What Is an HO3 Policy?

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What Is an HO3 Policy?

<lingo>An HO3 policy is a type of hybrid home insurance policy that combines both open and named perils, depending on whether referring to the structure of the home or the contents within it. In essence, it provides more comprehensive coverage for the building than it does for what's inside of it. 
On an open perils policy (used for the physical structure), the policy will list only the exclusions of that policy. For a named perils policy (used for the homeowner's possessions), the policy will list only the events that are covered. Therefore, the insured will get additional consideration if their home is damaged by an unlikely event, but not necessarily the same compensation for their personal property.</lingo> 

H03 Policy Explained

There are around 20 common exclusions on an HO3 policy for open perils, but they're events that many homeowners may not feel the need to protect against. For example, an HO3 will not provide coverage if anything is stolen from the home while the home is under construction. It also won't provide coverage in the event of war, nuclear hazards, or government action. However, it's still important for homeowners to understand partial coverage that may be provided by their policy. For example, an HO3 may cover partial mold or water damage under certain circumstances. Understanding these exclusions will make it easier to determine if you want to add further clauses to round out your policy.

 

<twitter>An HO3 policy is a type of hybrid home insurance policy that combines both open and named perils, depending on whether referring to the structure of the home or the contents within it.</twitter>

 

 

When it comes to the named perils portion of the policy, the list is more basic. These name perils only apply to your personal property located within the home. Perils include the standard events that you would expect to find on your policy, including fire, theft, vandalism, and windstorms. If anything occurs that isn't listed, the homeowner is fully responsible for replacement. Many people vastly underestimate the value of the contents within their home, especially if they've owned it for several years. This can lead to costly expenses down the line. For example, if your home electronics are exposed to water damage, you'll need to purchase new ones out-of-pocket. 

 

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