A home is a significant asset that every American should consider at some point or the other in his or her lifetime. Indeed it is home; a place to carve a future; to birth and rear children ; a place to go and rest after a long day’s work. Hence, it would be important to recommend ways on how this investment is to be protected and this begins with having it insured. To insure the home against fire, theft or natural disasters, homeowners insurance is mandatory in the United States. Homeowner insurance policies are numerous, but the most popular one is the HO-3 policy What are the pros and cons of this policy? In this article, I explain what HO-3 policies are, as well as their coverage and exclusions to ensure you get this aspect of home insurance right.
What is HO-3 Homeowners Insurance?
HO-3 is also known as homeowners 3, is the most popular type of homeowners insurance available in the USA. This policy is one that acts as a main insurance policy against disasters that may befall your home and your personal property.
Common Types of Home Insurance: HO-3 Homeowners Insurance
A. Dwelling Coverage
HO-3 insurance has a dwelling coverage as its major part. This part of the policy covers the building and other structures that are permanently fixed within the homestead, the walls, the floors, the roof and so on. In situations where there is a loss from an event or condition that is covered, this refers to fire, hail, or vandalism, the dwelling will cover for the cost of rebuilding or repair of your home.
B. Other Structures Coverage
HO-3 policies also include coverage for such items as detached garages, sheds, or fences that may exist in your compound. This coverage is usually customized to take effect in a small proportion of your policy limits since these structures are usually less costly than the house.
C. Personal Property Coverage
Any items in the car other than the mechanical components are shielded by personal property coverage, for example, furniture, clothes, electronics and appliances etc. This coverage customarily takes a percentage of your total policy limits, which can also come with limitations or be entirely excluded for high-risk items like jewelry or artwork.
D. Loss of Use Coverage
In case your home becomes uninhabitable as a result of any loss covered under your policy, loss of use will enable you to be compensated for other expenses you would have incurred while seeking other living quarters, meal expenses as well as other utility expenses. This will also help you to be able to keep paying your bills as your home is fixed or replaced.
E. Liability Protection
The HO-3 policies also provide liability coverage to protect you should someone suffer injury on your property and you end up liable to pay for it. This coverage will pay for the cost of legal representation, as well as any awards in a civil suit.
F. Medical Payments Coverage
Medical payment coverage is a kind of the liability protection which pays for the injuries and the accidents occurred in your property regardless of the negligence of the accident. Finally, the medical expenses can also be reimbursed within the limit of the coverage offered without filing a case.
Exclusions in HO-3 Homeowners Insurance
HO-3 policies provide almost unlimited coverage, but they do not protect you if: These typically include:
A. Flood And Earthquake Damage
HO-3 policy form does not provide coverage for losses due to flood and earthquake but they are available through separate special form or endorsements.
B. Some Kinds of Warranties and Maintenance
As a rule, HO-3 policies do not cover maintenance, wear and tear, or exclusionary problems such as a faulty foundation or rusty pipes.
Acts of Negligence or Intentional Acts
HO-3 policies do not provide coverage for harm occurring deliberately or carelessly, such as in cases of vandalism or a neighbor accidentally shooting off a gun and hitting one’s house.
D. Sewer Backup and; Sump Overflow
Sewer backup or sump overflow is not included in normal HO-3 policies but involves endorsements to be included by the policy owner.
How to choose the right HO-3 Homeowner’s Insurance Policy
When selecting an HO-3 homeowners insurance policy, there are several factors to consider, such as:
A. Coverage Limits
It is important to note that your policy limits should also be adequate in meeting replacement cost of your house and your personal belongings.
B. Deductibles
One may choose to take higher premiums by assuming low deductibles based on the fact they will pay lower premiums but the fact is they may be unable to manage with the deductible amount in case of a claim.
C. Exclusion and endorsements
Note specific exclusions in the policy and think of adding endorsements for features that you may need, which may include floods, earthquakes or sewer backup.
Provider Credentials and Solvency
You want to choose a company that has a good track record because a good track record equals good financial standing and they can come through for you when need be.
Other Special Coverages
Think about whether you require more special types of protection – as they are often called – like umbrella liability insurance or raising particular property limit.
Conclusion
HO-3 homeowners insurance is the most popular type of homeowners insurance in the United States and has open perils, which means it’ll cover your home and personal property in addition to other structures that may sit on your property. Through reading this article, you will be in a position to make the appropriate decisions in covering your most precious asset- the home through knowing the coverage, the exclusions and the factors that one should consider when choosing an HO-3 policy.
