Your HO-3 policy is your most important document. It defines exactly what is covered, what is excluded, and what your rights are during a claim. Understanding it before filing can mean the difference between a fair settlement and a lowball offer. Most policyholders pay premiums for years without reading their actual coverage — and when a claim arises, they discover surprises they never expected.
What Does an HO-3 Policy Cover?
Open Peril vs. Named Peril
What Is NOT Covered?
Common Exclusions That Cost Thousands
Replacement Cost vs. Actual Cash Value
Upgrade to RCV for Personal Property
Key Policy Endorsements That Matter
Key Takeaways
HO-3 provides "open peril" coverage on the dwelling but typically "named peril" coverage on personal property.
Flood, earthquake, mold, and sewer backup are almost always excluded without separate endorsements.
RCV pays full replacement cost; ACV subtracts depreciation — the difference can be tens of thousands.
Key endorsements like extended replacement cost, water backup, and ordinance/law can dramatically increase your recovery.
Review your policy and add endorsements before a claim — most cannot be added mid-claim.
Your Policy Is a Legal Contract
Ambiguities Favor the Policyholder
Drew — Licensed Public Adjuster
Reviewed: October 25, 2026Licensed in Florida and Texas, Drew has helped over 1,500 homeowners recover denied and underpaid insurance claims.