What basis does the HO-3 policy cover personal property?

The HO-3 policy, which is one of the most common homeowners insurance policies, covers personal property on a named perils basis. This means that the policy specifically lists the perils that are covered. If a peril is not included in the list, any damage to personal property caused by that peril would not be covered.

In contrast, an all perils basis would provide coverage against all risks except those explicitly excluded in the policy. This is not the case for the HO-3 policy regarding personal property, as it doesn’t provide coverage against every possible risk, only risks that are specifically named.

The actual cash value basis typically refers to how claims are handled, where depreciation is factored into the payout. While the HO-3 policy can cover certain items on an actual cash value basis, it is not the fundamental basis on which personal property is covered.

Replacement cost basis would mean that claims are paid based on the cost to replace the damaged property with new items of like kind and quality without deducting for depreciation. While aspects of an HO-3 policy might include replacement cost provisions for the dwelling, personal property coverage adheres to the named perils approach.

Therefore, the named perils basis is the correct coverage specification for personal property under