Start Here: 5 Things You MUST Know
HO policies are PACKAGE policies - they combine property AND liability coverage.
$1,000 = Damage to property of others (Section II additional coverage).
HO-3 = All-risk on dwelling, Named perils on contents. Most popular form!
30 days = Contents covered while moving to new home.
Medical payments do NOT cover household members - only third parties!
What is a Homeowners Policy?
What is a "Package Policy"?
A package policy bundles multiple types of coverage into ONE policy. Instead of buying separate policies for property damage AND liability, you get both in one package.
Why does this matter?
- Convenience: One policy, one premium, one renewal date
- Cost savings: Usually cheaper than buying separate policies
- No gaps: Everything works together, no coverage gaps
A Homeowners Policy (HO) is a package policy that combines:
Section I
Property Coverage
Covers damage to YOUR stuff and home
Section II
Liability Coverage
Covers lawsuits when YOU hurt others or their property
Who is an Insured?
- 1.Named insured and spouse
- 2.Residents of household who are relatives
- 3.Any person under age 21 in the insured's care
The HO Forms
HO-2 Broad
Named perils on BOTH dwelling AND contents.
Dwelling: Named | Contents: Named
HO-3 Special
All-risk on dwelling, Named perils on contents.
MOST POPULAR!
HO-4 Renters
For TENANTS - covers contents and tenant improvements.
No dwelling coverage (you don't own it!)
Tenant improvements = changes YOU made to the rental (new cabinets, built-in shelves, etc.)
HO-6 Condo
For condo UNIT OWNERS - named perils on contents.
Does NOT cover common areas
HO-8 Older Homes
Specifically for OLDER HOMES where replacement cost exceeds market value.
Modified settlement basis
| Form | For | Dwelling | Contents |
|---|---|---|---|
| HO-2 | Homeowners | Named Perils | Named Perils |
| HO-3 | Homeowners | All-Risk | Named Perils |
| HO-4 | Renters | N/A | Named Perils |
| HO-6 | Condo Owners | N/A | Named Perils |
| HO-8 | Older Homes | Modified | Named Perils |
Section I: Property Coverage
Section I Exclusions
Flood
Landslides/Mudslides
Animals, Birds, Fish
(theft)
Motorized Vehicles
(except lawn mowers)
Coverage C: Contents
- Worldwide coverage including theft
- Covered in full while moving for 30 days
- NOT covered: Boarders, renters, other tenants (unless related)
- IS covered: Guests, residence employees
Under Construction
HO policy on a dwelling under construction:
Does NOT cover THEFT
Construction sites are too risky - materials get stolen easily.
Additional Coverages
Additional coverages (like trees, shrubs, plants) are IN ADDITION to limits - they don't count against your dwelling coverage.
Ordinance or Law: Limited coverage provided as additional coverage when a law requires upgrades after a loss.
Section II: Liability Coverage
$1,000
Damage to Property of Others
Per occurrence - additional coverage under Section II
What Section II Covers
- Bodily Injury to third parties
- Property Damage to others' property
- On AND off premises activities
- Duty to defend lawsuits (stated in insuring agreement)
Medical Payments
Covers medical costs for injured third parties:
- Medical, surgical, x-ray, dental
- Ambulance, hospital, nursing
- Prosthetic devices, funeral services
NEVER applies to household members!
Duty to Defend
- Insurer MUST defend covered lawsuits
- Will NOT pay for defense on excluded claims
- Duty to defend ENDS when damages paid equal the limit of liability
Personal Injury Liability
False arrest, libel, slander, defamation, invasion of privacy:
NOT automatically covered - must add by endorsement for additional premium
Key Numbers to Memorize
$1,000
Damage to property of others
30
Days - contents while moving
21
Age limit for persons in care
3
Arbitrators in disputes
Special Rules
Cancellation Notice
If insurer cancels, must send advance written notice to:
- 1. Named insured
- 2. Mortgage company (both!)
Bankruptcy
Insured's bankruptcy does NOT relieve insurer of obligations. They still must pay valid claims.
Recovered Property
At insured's option: Return to insured (adjust payment) OR insurer keeps it.
Constructive Total Loss
When reconstruction cost exceeds market value, insurer considers it a total loss.
Rain Damage
Only covered if roof/wall was FIRST damaged by wind or hail, allowing rain in.
Residence Employee
A residence employee is someone you hire to do work at your home - like a housekeeper, nanny, or gardener.
Why it matters: Their personal belongings ARE covered if stolen from your home. They're also considered an "insured" for liability purposes while working for you.
Chapter 4 Cheat Sheet
Print for quick referenceHO-3
All-risk dwelling, named perils contents
HO-4
Renters - contents only
HO-6
Condo - no common areas
HO-8
Older homes
$1,000
Damage to property of others
30 Days
Contents while moving
Medical Payments
Never for household members
Worldwide
Contents covered globally
Under 21
Persons in care = insured
No Construction Theft
Theft excluded during construction
Duty to Defend Ends
When damages = limits
Personal Injury
Add by endorsement
Exam Trap Alerts
1. HO-3 Contents Are Named Perils
Only the DWELLING is all-risk on HO-3. Contents are still named perils!
2. Medical Payments = Third Parties ONLY
Medical payments NEVER apply to household members. Only covers injuries to guests and others.
3. HO-6 Does NOT Cover Common Areas
Condo associations have their own policy for common areas. HO-6 only covers YOUR unit.
4. Boarders Are NOT Covered
Property of boarders, renters, or tenants is NOT covered (unless related). Guests ARE covered.
5. 30 Days for Moving, Not 60
Contents are covered for 30 days while moving (not 60). Don't confuse with vacancy rules!