The six coverages at a glance
| Coverage | What it pays for | Typical limit |
|---|---|---|
| A — Dwelling | Rebuilding the house itself | Your rebuild cost (the anchor number) |
| B — Other structures | Detached garage, fences, sheds, ADUs | 10% of A (adjustable) |
| C — Personal property | Everything you own, worldwide | 50–70% of A |
| D — Loss of use | Rent + extra living costs while displaced | 20–30% of A, or a time limit |
| E — Personal liability | Lawsuits for injury or property damage | $100k–$500k (umbrella above that) |
| F — Medical payments | Guests' small medical bills, no fault needed | $1k–$5k |
Deep dives on each: Coverage A · Coverage B · Coverage C · Coverage D · Coverage E · Coverage F.
Coverage A — the number everything hangs off
Coverage A pays to rebuild your house after a covered loss. It is rebuild cost, not market value — the land under a Los Angeles home may be most of its price, but the policy only ever rebuilds the structure. Set Coverage A from construction cost per square foot in your area, not from Zillow.
In California this number does the most work, because wildfire losses are total losses. After every major fire, a wave of homeowners discovers they were insured for a number set years ago while construction costs kept climbing. Two protections close that gap: extended replacement cost (an extra 25–50% cushion above Coverage A) and building-code upgrade coverage (ordinance or law) for the code requirements your 1968 house never had to meet. We treat both as near-mandatory on California placements.
Rule of thumb
If your Coverage A hasn't been re-estimated in three years, it's stale. Our wizard suggests a starting limit from your square footage, and your broker verifies it with a full replacement-cost valuation before binding. How much dwelling coverage do I need?
Open perils vs named perils — the HO-3's split personality
The HO-3 is called the "special form" because it treats your house and your belongings differently:
The dwelling (A and B) is covered open-perils: any cause of loss is covered unless the policy specifically excludes it. The insurer has to point to an exclusion to deny.
Your belongings (C) are covered named-perils: only the ~16 causes listed in the policy — fire, theft, windstorm, vandalism, and so on. If the cause isn't on the list, it isn't covered. You have to fit your claim onto the list.
This asymmetry is exactly what the HO-5 comprehensive form removes — it covers your belongings open-perils too, usually at replacement cost. That's the "more coverage at a higher cost, better value" upgrade, and it's the specialty of our sister site BestHO5.com. See also: open perils vs named perils, with examples.
What an HO-3 never covers
The exclusions are short but heavy, and two of them are the defining gaps for California homeowners:
| Excluded | How you actually cover it |
|---|---|
| Earthquake | Separate policy — CEA through your carrier, or private earthquake markets. Guide |
| Flood (rising water, mudflow) | NFIP or private flood. Note: post-wildfire debris flows are a real CA risk. Guide |
| Wear, tear & neglect | Maintenance. A slow leak you ignored is not a claim. Plumbing guide |
| Ground movement / settling | Largely uninsurable on standard forms; some E&S options exist. |
| Intentional acts, business activity | Business on premises needs its own coverage. Home business guide |
Wildfire is NOT excluded
Fire — including wildfire — is a covered peril on every HO-3 and even on the FAIR Plan. California's wildfire problem isn't coverage language; it's carrier appetite and pricing. That's a shopping problem, which is a broker problem. How wildfire actually affects your policy →
The add-ons worth discussing
Endorsements are cheap relative to what they do. The ones we raise on almost every California placement:
Scheduled personal property — jewelry, art, instruments above the policy's small sub-limits, covered for agreed value with no deductible. Water backup — sewer/drain backup, excluded by default, inexpensive to add. Service line — the pipes and cables between the street and your house. Equipment breakdown — HVAC and appliances against mechanical failure. Umbrella liability — $1M+ of extra liability sitting above Coverage E for a few hundred dollars a year.
Replacement cost vs actual cash value
Every claim check is computed one of two ways. Replacement cost (RCV) pays what it costs to replace new; actual cash value (ACV) subtracts depreciation first. A ten-year-old roof replaced at RCV costs you your deductible; at ACV it can cost you half the roof. California carriers increasingly write roofs at ACV on older homes — it's one of the first things we check in a quote comparison, because it's where cheap quotes hide their cheapness. Full RCV vs ACV guide →
See it priced for your home
Four minutes to a live HO-3 indication — then sign the real ACORD 80 online.
Admitted carriers, FAIR Plan + DIC, and E&S markets, shopped by an independent broker. No fee, no obligation.
Get a pricing indication →Frequently asked
Does an HO-3 cover my home office?
Incidental office equipment yes (with sub-limits); business liability and inventory no. If clients visit or you store stock at home, you need a home business endorsement or a separate policy.
Are condos and townhouses covered the same way?
Townhouses you own roof-to-foundation usually take a standard HO-3. Condos take an HO-6 that meshes with the HOA's master policy. HO-3 vs HO-6 →
What about my rental property?
Rentals belong on a DP-3 dwelling policy — an HO-3 on a tenant-occupied home misstates the occupancy and puts claims at risk.