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HO3’s: Tips for Becoming a Certified Know-It-All

March 22, 2017  |  Posted by Nick Peterson  |  2901 Views

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The HO3 Homeowners form is the most popular form of homeowner’s insurance because it provides broad coverage and is familiar to most agents and insureds. HO3’s insure the Dwelling and Other Structures under an Open Perils form, the Contents for Extended Named Perils, and includes worldwide coverage for Personal Liability and premises Medical Payments to others. In addition, there is a wide array of optional coverages available by endorsement.

Items Often Overlooked About HO3’s

Who lives in the house?  Family members are covered if they reside in the household, but unrelated people are not unless named on the policy. Children in the care of the insured are covered until age 21 but not covered after that.

The insured’s children living away at school are only insured until age 24 and non-relatives until age 21 – beyond that they need to get their own coverage.

Vacant land is not automatically insured if there is anything man made on it – a sign, a fence, anything not put there naturally will make the automatic coverage go away.

Damage from rain or wind-driven water leaking from the roof or walls is only covered if first there is damage to the roof or walls that allows the water to enter.

If the house is vacant or unoccupied for more than 30 days there is no coverage for glass breakage, theft, vandalism or even water damage unless the insured has shut off the water supply and drained the toilets and water heater tanks. This restriction varies by company – check your policy form.

Personal property stored at a mini-warehouse are covered for only up to 10% of the contents limit.

Occasionally renting the house (ex: for the Super Bowl game) will be ok, but if the house is rented out on a regular basis the insured could lose protection for a liability claim.

Ordinance or Law is a very important coverage that is often overlooked.  Offer the higher coverage options to all insureds that own older homes that have not been fully updated.

Does the insured run a business from home?  It may be OK to leave it under the HO3 policy If they make less than $2000 a year, but that could change.  Better recommend a Business Policy to cover the exposure. If the business operates from a detached garage or pool house, there is no property coverage for that building unless it is insured separately.

It’s OK for the insured to store his own business related property or equipment in a detached garage or other structure, but not any gas or fuel cans in connection with that equipment – that will void coverage for the structure!

Don’t overlook that your client may own expensive antiques, collectibles, jewelry or gun collections.  Recommend to schedule these items to provide broad All Risks protection but remember that the amount of insurance or the amount appraised is not necessarily the amount the company will pay in case of loss.  Most loss settlement conditions allow the company to repair, replace or settle for the current Actual Cash Value or market value of the item. Don’t forget to request Breakage coverage on fragile antiques.

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