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H0-3 vs HE-7: What’s the Difference?

HO7 vs HE7 home insurance

According to current statistics, approximately 95% of homeowners in the United States carry homeowner’s insurance on their dwellings. One reason why this number is so high is due to the fact that, when you buy a house and finance it through a mortgage company, that company requires that you maintain at least a minimum amount of homeowner’s insurance coverage on the home. This requirement is to ensure that their financial exposure is protected in the event that something occurs to cause harm or to destroy the home.

Insurance For All Types of Homes

There is a variety of homeowner’s insurance types of which many homeowners may not be aware. This includes Forms HO1, HO2, HO3, HO4, HO6, HO8 and more. By far, the most popular and commonly sold homeowner’s insurance policy is the HO3 Special Form. Unlike the HO1 and HO2 policies, which are “named perils” policies, meaning they only cover specific perils listed in the contract, the HO3 is an “open perils” coverage, meaning it covers just about any peril (except those expressly excluded in the contract). Typical exclusions to “open perils” policies include:

  • Earthquakes
  • Floods
  • Landslides
  • Nuclear accidents
  • Neglect
  • Mold/fungus
  • General wear and tear
  • Pest damage or insect infestation

The reason the HO3 policy, often referred to as standard coverage, is the one most commonly sold is because it’s the most affordable means for insuring your home to the minimums required by mortgage companies.

Enhanced Coverage

In the State of North Carolina, there’s something available called an Enhanced Homeowners Insurance Policy, or HE7. This coverage is typically only offered by companies working with independent insurance agencies. You won’t usually find it being sold through the large, national insurance chains.

HO3 vs HE7 Coverage

The HE7 Policy is a step up from the HO3 as far as the coverage provided. Here’s a chart that gives a clear explanation of HO3 vs HE7 coverage.

Both policies contain the same five types of coverage:

    • Dwelling
    • Other structures
    • Personal property
    • Loss of use
    • Personal Liability

Policy limits and approved claims causes, however, are much more favorable to the insured with the HE7 coverage. Some examples of this include guaranteed full replacement dwelling and contents costs. Study the chart and consult your independent agent. You’ll see there are numerous areas where the HE7 provides superior coverage compared to the HO3.