Homeowners Insurance: Law and lessons (Part 2)

HO-2, HO-3, “named perils” and “open perils” defined, plus inclusions, exclusions, claims adjustors and reading the fine print.

Acts of God. (Image via Wikipedia entry on English poet William Blake, public domain)

WASHINGTON, August 20, 2017 – In last week’s column, we discussed some of the concerns many have about homeowners insurance coverage and protection.

Read also: Homeowners Insurance: Law and lessons (Part 1)

In today’s column, we offer first a quick review of what we covered last week. Then, we examine some common, real life examples.


Coverage A is dwelling coverage. This portion of your homeowners policy covers the brick and mortar of your home, and other structures, objects and things that are permanently attached to your home. Any damage to the interior or exterior structure of your home is likely covered under this section of your policy.

Coverage B is other structures coverage. This is coverage for a shed, a detached garage, a pool house and similar detached structures. Damage to or destruction of these other structures is protected up to the actual replacement cost and limits of your policy.

Coverage C is personal property coverage. This coverage protects against theft and damage to things in your home, such as electronics, furniture, clothing and appliances. This part of your policy typically includes limited protection for art, jewelry, cash, firearms, precious stones and other named items. It also covers things inside chests and dressers.

Coverage D is loss of use coverage. In the event your home is destroyed or severely damaged, you are reimbursed (sometimes within certain limits) for the cost of living in a hotel or another temporary home rental, until your house is rebuilt or repaired. You also get some stated amount to cover meals, because it is understood that now that you do not have the use of your kitchen, which would ordinarily help you save money on meals. Eating out simply costs more. Hence, this coverage. Finally, your policy may offer some compensation for additional costs of commuting if your drive to and from work is greater than when you lived in your now-destroyed home.

Coverage E is personal liability coverage. It protects you if a guest in your home is injured.

Coverage F is medical expenses to others. It provides a minimum amount for medical bills for someone, not you or your family members, who is injured in your home.

HO-2 and HO-3

Today, we’ll discuss two very common forms of home insurance, HO-2 “Broad Form” and HO-3 “Special Form” coverage. Termed HO-2 and HO-3, these are the most common forms of homeowners insurance policies today, focusing on “what is covered” in the event of a loss due to catastrophes such as fire, theft, hail, hurricane, falling objects and the like. These two forms are used for detached single family houses as well as townhouses and row houses.

An HO-2 is commonly referred to as a “Named Peril” policy, while an HO-3 as an “Open Peril” policy. Just to be clear, a “peril” is defined as the event or threat that is being covered, such as fire, theft, or hail.

An HO-2 policy protects against loss and damage to things that are listed, i.e., “Named” perils. An HO-3 policy protects valuables unless they are specifically excluded. Most policies today are HO-3 policies, which are, you would think, clearly better than HO-2 coverage. HO-3 policies are considered the industry standard in most states and areas.

You should still be sure to check the fine print of an HO-3 policy which identifies what, exactly, is excluded from coverage

Action Step: Get a copy of the full policy and make your agent tell you specifically everything that is not covered. (Homeowners insurance coverage, for example, will generally not include normal wear and tear to things in your home if they fail, break or crack.) You will likely experience some pushback from the agent on this issue. But insist on getting the entire policy so you can examine it yourself.

Homeowners insurance typically covers property damage due to what are generally termed “acts of God;” otherwise meaning damage and loss attributable to Mother Nature, such as damage to a dwelling caused by high winds or lightning strikes.

It is important to note that property damage due to floods is generally covered only by purchasing an additional flood insurance policy. Likewise, damage and loss due to earthquakes and/or landslides are typically not covered unless you have added such coverages, or “endorsements,” to your policy. This will vary by state.

Accordingly, a word to the wise: Always make sure to have your policy – the full policy – at the ready in the event of a claim situation. Be prepared to quote section, paragraph, line and specific words to the adjuster before you make the call to file or follow up on a claim.

What follows are some real life situations and the likely response by your homeowners insurance company’s claims unit. Appreciate that this process is plagued with nuances and fine print. Also note that the primary job of a claims adjuster is to save his or her company money, not to pay you.

With these basic understandings in mind, consider the following examples:

Typical coverage limitations or exclusions

  • Hail, lighting strikes or storm damage – Covered.
  • Flood: Likely not covered without additional purchase of flood insurance.
  • Vermin or other pests: Likely not covered. However, if pests move in after a storm due to a new hole in your roof, pest damage should be covered.
  • A pipe in your home bursts. The damage the water does to your home is covered. The pipe itself may not be covered because it probably broke due to wear and tear.
  • Cracked foundation in your basement – Not covered.
  • Water damage from your sump-pump – Not covered, unless you have “water back-up” coverage.
  • Neighbor’s tree falls on your house – If you brought it to your neighbor’s attention that there were signs of the tree damaging your home (hopefully in writing), then their insurance company should cover the damage to your home. Signs of problems include the tree being dead or rotting or even limbs hanging close to your home. If the neighbor had no notice the tree was a problem, your homeowner’s coverage will cover the damages instead.
  • Guest in your home is injured – If the injury was caused by your negligence, your insurance will cover all of your guests damages. Examples include you not telling your guest that the stairwell to go up or downstairs is badly in need of repair and not to step on the third step. Or, your dog, known to bite, gets out of the cage and bites your guest. Or, you failed to clear your driveway or outer walkway after a reasonable time of ice, and your guest falls and breaks a leg.

Renters Insurance

Finally, where does homeowner’s insurance come in for someone renting a room in your home?

You should insist the renter obtains renters insurance. That policy MUST name you as an “insurable interest” on the policy. That way, if damage occurs somewhere in your home on behalf of the tenant, his or her renter’s insurance policy will likely provide coverage for your home. Your policy may pay for renter-caused damage, but why should it have to?

In conclusion

Today’s helpful tips and information are thanks again to Tony Iannarelli, now my “go-to” guy insurance agent in Fairfax, Virginia. He educated me on homeowners insurance coverage and proofread this article.

Last week you were told here “not to pass GO, not yet to collect $200, and to definitely save your Monopoly game.”

You may now pass GO and purchase your homeowner’s policy. Buyer Beware, my friends. Understanding your policy is the entire game, and the game is definitely not Monopoly.


Paul A. Samakow is an attorney licensed in Maryland and Virginia, and has been practicing since 1980.  He represents injury victims and routinely battles insurance companies and big businesses that will not accept full responsibility for the harms and losses they cause. He can be reached at any time by calling 1-866-SAMAKOW (1-866-726-2569), via email, or through his website

His book “The 8 Critical Things Your Auto Accident Attorney Won’t Tell You” can be instantly downloaded, for free, on his website: http://www.samakowlaw.com/book.

Samakow has now also started a small business consulting firm. The website for this business is brand new and Mr. Samakow will be most appreciative of any and all comments. www.thebusinessanswer.com.


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