Home Insurance
Homeowners Insurance Basics: HO-3 Policies Explained
Understand dwelling coverage, personal property limits, liability protection, and the exclusions that surprise homeowners after a claim.
9 min · Published February 10, 2026
Core HO-3 coverages
Most homeowners buy HO-3 policies covering the structure on an open-perils basis and personal property on a named-perils basis. Dwelling limits should reflect rebuild cost, not market value or purchase price.
- Coverage A — Dwelling
- Coverage B — Other structures
- Coverage C — Personal property
- Coverage D — Loss of use
- Coverage E — Personal liability
Common exclusions
Flood, earthquake, wear and tear, and many sewer backups are excluded unless endorsed. In hurricane-prone states, wind deductibles may apply as a percentage of dwelling coverage rather than a flat dollar amount.
Replacement cost vs. actual cash value
Replacement cost endorsements pay to rebuild or replace without depreciation deductions. Actual cash value policies cost less upfront but pay less after aging roofs or damaged contents.