What does HO-3 encompass?

The HO-3 policy is known as a special form of homeowners insurance that provides coverage for both the structure of the home and personal property. It covers all risks for the dwelling, meaning that unless a specific exclusion applies, the structure is protected against various types of damages. In contrast, it provides broad form coverage for personal property, which includes specific named perils that are listed in the policy.

This structure allows homeowners to benefit from extensive coverage for their homes while still protecting their personal belongings against certain risks. The distinction between the coverage types for the dwelling and personal property is critical—giving homeowners a comprehensive safety net for their primary residence and its contents without leaving them vulnerable to unforeseen incidents.

The other choice indicating only personal liability coverage does not apply here since the HO-3 policy is more expansive. Additionally, saying it offers comprehensive coverage for all risks misrepresents the limitations necessary for personal property coverage, and labeling it as basic coverage for older homes overlooks the more inclusive nature of the HO-3 policy. Thus, understanding the delineation between the special coverage for the dwelling and broad coverage for personal items is key to recognizing the strengths of the HO-3 policy.