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HO-3 vs HO-6 insurance

Fact-checked with HomeInsurance.com

Not all homeowners insurance policies are created equal. Some policies are designed for high-risk homes, some offer comprehensive coverage and others are meant for manufactured homes. When you’re shopping for home insurance, it’s important to know the purpose of the different policies so you can find the best one to protect your home and belongings. In this article, we’re going to compare HO-3 and HO-6 home insurance policies to help you figure out which might be a better fit for your property.

What is an HO-3 policy

An HO-3 insurance policy is the most common type of homeowners insurance that offers protection for standard homes. It includes open peril coverage for your dwelling and named peril coverage for your personal belongings. HO-3 insurance primarily includes the following coverages:

  • Dwelling: Protects the physical structure of your home, including attached structures, like a garage or porch.
  • Other structures: Covers other structures on your property that are not attached to your home, such as a shed or fence.
  • Personal property: HO-3 insurance covers your personal belongings if they get damaged or destroyed in a covered (or named) peril. 
  • Liability: Covers you in a lawsuit if a guest is injured on your property, or you accidentally caused damage to someone else’s property.
  • Medical payments: Helps pay for a guest’s medical bills if they sustain injuries on your property, whether or not you are responsible. 
  • Loss of use: Pays for hotel, food, parking and laundry costs if your home becomes uninhabitable and you have to temporarily relocate.

Here are some of the advantages and drawbacks of HO-3 policies to consider:

Open peril coverage for dwellingLimited coverage for personal property 
Affordable premiumsActual cash value payout 
Available from all property insurance providers

What is an HO-6 policy

An HO-6 insurance policy is a type of property insurance that covers condos on a named peril basis. Because condo owners own their individual unit and not the entire building, specialized coverage is necessary. Here is what HO-6 insurance covers:

  • Physical damage: Includes coverage for the interior of your unit, including damage related to smoke, fire or sudden water damage.
  • Personal property: HO-6 insurance covers your personal property from a list of named perils, such as hailstorms and theft.
  • Liability: Covers your liabilities as a condo owner in case you get sued for a guest’s injuries or cause property damage.
  • Medical payments: Pays for a guest’s medical expenses if they are injured on your property.
  • Loss of use: Pays for basic living expenses and food if your condo gets damaged in a covered peril and you have to move out while it gets repaired.

For HO-6 policies, there are also benefits and disadvantages to keep in mind:

Protects your personal belongings and liabilitiesCovers personal property on a named peril basis
Replacement cost value payoutNot all property insurance companies sell it
Some policies have loss assessment coverage

HO-3 versus HO-6 insurance 

HO-3 vs. HO-6 insurance are very different insurance policies. The main difference is the type of properties they cover. HO-3 insurance covers standard homes, whereas HO-6 insurance covers condos.

Another difference is what portions of the property each policy covers. HO-3 insurance includes dwelling coverage for the exterior of the home, but condo insurance does not, since the building owner would have their own policy to cover the exterior. Instead, it includes physical damage coverage for the interior of the unit. Both policies include personal property, liability and loss of use coverage. 

The other key difference is the form of reimbursement you get when filing a claim. With HO-3 insurance, your insurance company covers your property with actual cash value (ACV) by default. On the other hand, HO-6 insurance policies typically have replacement cost value (RCV) coverage. That means you can expect a bigger payout after a claim with HO-6 insurance because depreciation is not factored into the loss.

Here’s a look at the key differences for HO-3 and HO-6 insurance:

Meant for standard homesMeant for condos
Required by mortgage lendersRequired by mortgage lenders
Actual cash value paymentReplacement cost value payment
Includes dwelling coverageIncludes physical damage coverage

Which one is better?

If you’re comparing HO-3 vs. HO-6, know that one isn’t necessarily better than the other. Each policy serves a different purpose. If you own a regular home, an HO-6 policy would not provide complete coverage. If you own a condo, your building owner would have a policy to protect the exterior, so an HO-3 policy would create overlap. To help determine which policy type is a better fit for your circumstances, consider the following:

Why choose an HO-3 policy?

  • You own a standard home.
  • You need coverage for the exterior of your home.
  • Your mortgage lender requires it.

Why choose an HO-6 policy?

  • You own a condo.
  • You want protection for the interior of your unit.
  • You need loss assessment coverage.

Alternatives to HO-3 and HO-6 insurance policies

If you own a standard home or condo, there are several alternatives to HO-3 and HO-6 policies that could also fit your insurance needs. Here are some other policies you might consider:

  • HO-2: HO-2 insurance policies cover high-risk homes, but they offer very little coverage and are hard to find these days. 
  • HO-5: HO-5 insurance offers comprehensive coverage for standalone homes, with named peril coverage for personal property and open peril coverage for your dwelling.
  • HO-7: HO-7 insurance is a type of home insurance that specifically covers mobile and manufactured homes.
  • HO-8: HO-8 insurance covers older homes that don’t qualify for an HO-3 policy. 

The takeaway

  • HO-3 insurance is the most common type of home insurance for standalone properties.
  • HO-6 insurance covers condos specifically.
  • Both policies include personal property, liability, medical payments and loss of use coverage.

HO-3 and HO-6 insurance cater to different home owners. HO-3 insurance is designed for standalone homes, and HO-6 insurance is used to cover condos. There are some similarities—they both cover personal property, liability, medical payments and loss of use coverage. However, HO-3 insurance includes dwelling coverage and HO-6 insurance includes physical damage coverage for the interior of your unit. Additionally, HO-3 insurance usually has ACV coverage, whereas HO-6 insurance typically includes RCV coverage. It’s important to learn about all different home insurance policy types to ensure you’re getting the coverage needed for your exact situation.

Elizabeth Rivelli

Elizabeth is an insurance writer for coverage.com, where she covers insurance providers and reviews policies to help consumers find comprehensive and affordable coverage for every area of their life. She has more than three years of writing experience for top online insurance and finance publications.

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