Homeowners Policy (HO Forms)
Homeowners policies are standardized insurance contracts (HO-2, HO-3, HO-5, etc.) that provide property and liability coverage for owner-occupied residences.
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Exam Tip
HO-3 = most common. A=dwelling, B=other structures, C=contents, D=loss of use, E=liability, F=medpay.
What are Homeowners Policies?
Homeowners policies are package policies that combine property coverage (for your home and belongings) with liability coverage (for lawsuits) in a single contract. Standard forms are developed by ISO (Insurance Services Office).
HO Policy Forms
| Form | Name | Perils | Best For |
|---|---|---|---|
| HO-2 | Broad Form | Named perils | Budget-conscious |
| HO-3 | Special Form | Open (dwelling), Named (contents) | Most common |
| HO-4 | Contents Broad | Named perils (renters) | Renters |
| HO-5 | Comprehensive | Open perils for everything | Premium coverage |
| HO-6 | Unit-Owners | Named perils | Condo owners |
| HO-8 | Modified | Functional replacement | Older homes |
Coverage Sections
| Section | What It Covers |
|---|---|
| Coverage A | Dwelling - the house itself |
| Coverage B | Other Structures - detached garage, shed |
| Coverage C | Personal Property - contents |
| Coverage D | Loss of Use - temporary living expenses |
| Coverage E | Personal Liability |
| Coverage F | Medical Payments to Others |
Standard Coverage Relationships
| Coverage | Typical % of Coverage A |
|---|---|
| Coverage B | 10% of A |
| Coverage C | 50-70% of A |
| Coverage D | 20-30% of A |
| Coverage E | $100,000-$300,000 |
| Coverage F | $1,000-$5,000 |
HO-3 vs. HO-5
| Feature | HO-3 | HO-5 |
|---|---|---|
| Dwelling | Open perils | Open perils |
| Contents | Named perils | Open perils |
| Premium | Standard | Higher |
| Protection | Good | Best |
Common Exclusions
- Flood (NFIP required)
- Earthquake (endorsement available)
- War and nuclear hazard
- Intentional acts
- Business activities
- Motor vehicles
- Wear and tear
Exam Alert
HO-3 is the MOST COMMON homeowners policy. Know the difference: dwelling is open perils, contents are named perils. HO-5 provides open perils for everything.
Study This Term In
Related Terms
Named Perils
Named perils coverage only protects against specific risks explicitly listed in the insurance policy, such as fire, lightning, windstorm, and theft. If a peril is not named, it is not covered.
Open Perils
Open perils coverage (also called "all-risk" or "special form") protects against all causes of loss EXCEPT those specifically excluded in the policy, providing broader protection than named perils.
Replacement Cost
Replacement cost is a property valuation method that pays the full cost to replace damaged property with new items of like kind and quality, without deducting for depreciation.
Actual Cash Value (ACV)
Actual Cash Value is a property valuation method that equals replacement cost minus depreciation, representing what property is worth today after accounting for wear and tear.
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