The Limits of the HO3 Insurance Policy: When Should You Consider Personal Articles Floater?

How often have you come across clients that did not have a basic understanding of the HO3 insurance policy they bought? According to a survey by, 400 out of 1000 respondents admitted that they don’t know how the property insurance works. 

How many of your insureds have expected the HO3 to cover their stolen valuables? Only to find out that the coverage felt short.  

So, as their agents, you need to explain to your clients. How much are the coverages and the prices? And the advantages that come with the plans? 

The topic we will cover today will affect most of your clients: The Special Limits of Liability of an HO3 insurance policy and why you should consider adding a Personal Articles Floater to their insurance plan.

HO3 Insurance Policy Concerns  

The opportunities for unendorsed HO3 insurance policy are vast. And often confuse young insurance agents. We understand that you want to give the best to your clients. And for that, you should be careful.   

After all, if you fail to give your clients the best solutions, in the event of loss, coverages might fall short.    

You might even lose your client.    

More importantly, you could be liable for errors and omissions claim.  

According to the IIABAhomeowners’ insurance alone drives 12% out of 29% of personal lines E&O claims against independent agents. These data indicate that providing better protection for your client’s valuables will avoid accusations of advice omission.   

misconception most clients have is that their HO3 insurance policy adequately covers their personal property.   

HO3 insurance does provide content coverage under coverage C. However; there are certain sub-limitations detailed in the plan (in fine print).   

The HO3 insurance policy explicitly limits theft coverage for personal belongings like jewelry, computers, and money.   

Typically, the HO3 policy restricts the loss of jewelry, watches, and furs for theft anywhere from $1000 to $2500 depending on the carrier or state. Additionally, there will be no coverage for jewelry if it gets lost on vacation.    

If you do not help clients understand this sub-limit, their personal belongings might practically be uninsured when compared to its value.    

Similarly, the standard HO3 insurance policy provides a broad form of coverage for personal property, i.e., the provision for coverage is on named perils. It shows that the HO3 does not cover all risks.   

Quick fixes      

For a quick fix, add endorsements! In the first case, you could add a scheduled personal property endorsement to the HO3 insurance policy. However, it always costs extra premium for add-ons.    

On the other hand, when your clients want full protection for their contents, you could opt for adding an endorsement. Specifically, the one that provides coverage on an “all-risk basis” instead of named perils.   

These fixes sound smooth and substantial. Most of the time, they are. But when it comes to the contents that are in the HO3 insurance policy’s particular limits of liability, you must be careful.   

Otherwise, the coverages will fall short in case of theft, and your client will suffer.   


A named-perils policy only covers the risks explicitly noted in it. If vandalism is not in the plan and your insured’s place gets vandalized. The carrier will not be liable for any coverages.   

It’s the opposite in an all-risk or open peril policy. Only the exclusions mentioned in the plan are not covered. Otherwise, all risks have coverage.   

HO3 Policy Solutions

Have you been tackling your client’s concerns properly?

Adding an endorsement to increase the HO3 insurance policy limits might seem like a job well done. Considering the coverage for jewelry, watches, watercraft, banknotes, grow slightly. But this does not mean that the plan is entirely foolproof.   

You need to help your client understand the limits on the HO3 insurance policy you are proposing and address these carefully.        

You can see that the limits will vary when you sort through each item.    

For example, the coverage limit provided by carriers for money, banknotes are $200 to $2500. Subsequently, the ceiling for theft of watches, furs, and jewelry is from $1500 to $10000.        

You can see that these ranges are too wide not to take note. It will result in unfavorable outcomes in case of an event of loss or theft.   

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Remember, it’s not just about the money! Personal articles have sentiments attached as well. 

Besides, some carriers do not have provisions for increasing the limit. You will need to consider these options when you discuss them with clients.      

True, it might be dull work to review all the possible limitations of the HO3 insurance policy with your clients.   

But, provide a detailed sales presentation that includes particular limits. Doing so will make it easier for both prospects and the agent.   

A sales presentation reminds the agent to mention inside limits of theft. And also additional restrictions on different items for every cause of loss. It makes it easier to ask questions to engage the prospects as well.   

If you were to have a total loss, could you replace all the computers and their peripheral equipment for $3,000?   

Would $5,000 be enough? Ok, let’s increase that to $10,000.    

No, your daughter’s laptop at school needs its own policy/endorsement. So it has coverage away from your home for more causes of loss.   

Suppose your clients have people over for dinner. The guests’ toddler knock over the expensive vase they got from Italy. The HO3 coverage is not enough to cover for it. Moreover, your clients cannot sue their friends. It is complicated!  

Yes, there is the option of subrogation insurance. However, would it not be nice just to have the vase insured?  

Ask your clients if they feel like any of the limits are inadequate and address the issues accordingly.   

Personal Articles Floater

Is it worth buying a separate policy?

Let’s assume that you have a new prospect for the Homeowner’s insurance policy you have proposed. Still, there are some concerns with a few personal belongings, especially the jewelry limitation.     

According to Valuepenguinclients mention jewelry 18% more than any other item during homeowner claims.    

How do you address this concern?    

First, offer to schedule an endorsement. Most insurance carriers allow you to increase the limits for these items. With additional premium, of course.   

Cross-check with your insurance carriers to be familiar with the solutions they might be able to offer. It is an advantage for independent agents since they have many carriers in their book to review.    

Don’t rely entirely on the HO3 insurance policy because they might not always be adequate.   

When in doubt, schedule the jewelry items on a Personal Articles Floater.   

What is Personal Articles Floater?

The Personal Articles Floater is an all-risk insurance policy. It takes its name from the fact it “floats” with the property owned wherever they go.   

It doesn’t matter if your insured’s ring gets lost in their bedroom or a hotel room in Alaska, the personal floater article will cover it.    

So, now suppose your client’s ring falls down the drain while doing the dishes. If they only had an HO3 insurance policy, they will not be eligible for any claim.   

However, if they have separate personal articles floater policy for the ring, the ring is fully covered. Then, the client can contact you for a claim settlement.   

Also called an Inland Marine Policy, the personal articles floater provides more coverage for belongings than a standard HO3.  

A recent case was of a substantial claim for $2.55 million on the house in New York. A fire that started from the second-floor bathroom spread all over the house.   

The HO3 policy covered the loss of the house. But was that enough? The insureds lost most of their belonging. Now, if they had personal articles floater for their valuables, they could make a claim. But, sadly, they did not.  

According to research conducted by Javelin Strategy and Research in 2018, more than 14.4 million adults became victims of identity theft in the US.   

Now, your standard HO3 insurance would not incorporate these losses. However, if you add an insurance rider like the personal articles floater to the limited HO3 policy, it will leave your clients protected and covered.   

It is your job as an agent to walk your clients through this process. You need to figure out the right coverage and the carrier for the clients’ needs.   

To make the procedure even more straightforward, have your clients bring a comprehensive list of valuables. These could include things like photos/videos, receipts of the items.   

Recommend them to keep the list detailed and up to date.   

Among all perils, the personal articles floater covers fire, cyclone, explosion, vandalism, theft, mysterious disappearance, and breakage.   

However, do note that the personal articles floater has two exclusions:  

i. When a loss occurs due to wear and tear inherent vice, or deterioration,  

ii. When damage occurs due to vermin or insects.     

In any of these instances insured will not be eligible to make any claims.


Read up about the division of property in a Personal Articles Floater.   

A standard procedure in the personal articles floater is to divide the property into scheduled and unscheduled features.    

Unscheduled items are the general things that don’t need to have a set value attached to them. For instance, you can group silverware, pots, clothing, and other materials together.    

For specific and valuable objects like a painting or family heirloom, scheduling is the best option. Instead of being clustered into one category, personal articles will specifically cover them.   

So next time you have a client looking for an HO3 policy, suggest a Personal Articles Floater for their valuables, if necessary, instead of relying on luck.     

Do you agree with our suggestions? Did we miss something out? Comment below and let us know!

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Schedule a call right now and learn how you can ease your work, sell more, and increase your profits!