HO3 vs. HO6: What’s the Difference?

As a homeowner, you likely understand the importance of having homeowners insurance. But did you know that not all home insurance policies are created equal?

Let's say you own a single-family home in the suburbs, and your friend has a condo downtown. You both need insurance to protect your properties, but you'll need different policies to do so. HO3 policies – the most common type of homeowners insurance – are designed for traditional single-family homes, while HO6 policies are geared toward condos and some townhouses.

We’ll break down the nuances of these homeowner policies to help you build your knowledge and be prepared regardless of the type of structure you call home.

What Is an HO3 Policy?

First, let's talk about HO3 policies.

An HO3 policy is the most common type of homeowners insurance, and it covers your home for common perils such as fires, windstorms, theft, and vandalism. It's the type of policy you'll need if you own a single-family home, and your mortgage lender will likely require you to have one.

So, what's included in HO3 insurance? This kind of policy typically offers six types of coverage:

• Dwelling coverage: This insures your home's structure, such as the walls and roof.
• Additional structures coverage: This covers things like detached garages, fences, and other structures on your property.
• Personal property coverage: This protects your personal belongings, such as electronics, furniture, clothes, and more.
• Personal liability coverage: This provides financial protection when you're held liable for another person's property damage or injuries.
• Additional living expenses coverage: This pays for daily living expenses like hotels and meals if your home is temporarily inaccessible due to a covered loss, such as your home needing repairs after a fire.
• Medical payments coverage: This covers medical bills for another party's minor injuries sustained inside your home (though not always included).

If you own a single-family home, an HO3 policy is the simplest way to protect your property and belongings from unexpected events like fires, theft, and natural disasters.

What Is an HO6 Policy?

HO6 insurance policies are designed for condos and some townhouses. If you own a unit in a condominium or townhouse, you'll likely need an HO6 policy to protect your property. Your condo association's insurance policy typically only covers the building's exterior and common areas, so you'll need your own policy to cover your unit's interior and personal belongings.

So, what does an HO6 policy cover? Generally, HO6 policies include coverage for your personal property, personal liability protection, and additional living expenses if you need to relocate temporarily due to damage to your unit. 

Just as with HO3 policies, it's important to carefully review the specifics of your HO6 policy to understand what is and isn't covered. Some policies may also include coverage for improvements you make to your unit.

HO3 vs. HO6 Home Insurance Policies: What Are the Differences?

Let's take a closer look at the differences between HO3 and HO6 insurance policies.

While both policies provide insurance for homeowners, there are some significant differences between the two. HO3 policies are designed for traditional single-family homes, while HO6 policies are geared towards condos and, sometimes, townhomes. 

Another significant difference is the type of coverage each policy provides. HO3 policies typically offer coverage for a mix of named and open perils, while HO6 policies tend to offer coverage for fully named perils.

Named perils coverage means just what it sounds like — the policy only covers specifically named perils or events. Your policy may only cover damage caused by fire, lightning, or theft. Open perils coverage covers all perils except those specifically excluded from the policy.

So, what does this mean in practical terms? An HO3 policy would be ideal for a single-family homeowner who wants comprehensive coverage for their home and belongings. This policy would protect against a wide range of perils, including fire, lightning, theft, and vandalism. 

An HO6 policy would be a better fit for a condo or townhouse owner who wants to protect their personal property and liability. This type of policy typically covers named perils like theft or damage caused by burst pipes or leaks.

Understanding these differences can help you choose the right policy to protect your property and belongings in case of unexpected events.

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HO3 vs. HO6: Which Costs More?

Overall, HO3 policies tend to be more expensive than HO6 policies due to the broader coverage they provide.

Average national cost of insurance per year

When it comes to the cost differences between HO3 and HO6 policies, it's worth noting that condo insurance is often cheaper than traditional homeowners insurance due to the lower dwelling coverage requirements. However, condo owners should also keep in mind that a portion of their HOA dues goes toward purchasing coverage for items excluded in an HO6 policy, such as the roof and common areas.

Various factors and nuances can impact the overall cost of your policy. To get a better idea of what your premium might be, try our helpful homeowners insurance calculator.

Should I Get an HO3 or HO6 Policy?

So, which type of policy should you get for your home, condo, or townhouse? Ultimately, it depends on your individual needs and circumstances. If you own a single-family home, an HO3 policy is likely the way to go. This policy will provide comprehensive coverage for your home and belongings in case of unexpected events like fires, theft, and natural disasters.

On the other hand, if you own a condo or townhome, an HO6 policy is typically the better option. This policy will provide coverage for your personal property and liability and is tailored to the specific needs of condo and townhouse owners.

Regardless of which type of policy you choose, it's important to carefully review the specifics of your policy to understand what is and isn't covered. The best way to ensure you have the right type of policy for your home, condo, or townhouse is to work with an independent insurance agent. They can help you navigate the complexities of homeowners insurance and find the right policy to protect your property and belongings.

FAQs about HO3 vs. HO6 Insurance