Home Insurance · Policy Types
What Is an HO-3 Insurance Policy? (Complete Guide for 2026)
An HO-3 is the standard homeowners insurance policy in the United States. It covers your dwelling on an open peril basis — meaning everything is covered unless specifically excluded — and your personal property on a named peril basis. About 80% of U.S. homeowners carry an HO-3.Get Your Free Quote
What It Is
The most common homeowners policy form. Open peril on the dwelling, named peril on personal property. Covers fire, wind, hail, theft, liability, and more.Who It Covers
Any owner-occupied single-family home, townhome, or condo (with HO-6 for walls-in). Renters and landlords use different forms.What It Costs
Texas averages $3,500-$4,500/year for a standard HO-3 on a $300K home. Rates vary by location, roof age, and wind exposure.Canopy Advantage
We compare HO-3 quotes from 18+ carriers in one conversation. Same coverage, different price — often $500-$1,200/year difference between carriers.Is HO-3 the same as standard homeowners insurance?
Yes. When people say "homeowners insurance" they almost always mean an HO-3 policy. It is the default form that carriers issue for owner-occupied homes.Does an HO-3 cover flood or earthquake?
No. Flood and earthquake are excluded from every HO-3 policy. You need a separate flood insurance policy through NFIP or a private carrier, and a separate earthquake endorsement if needed.What is the difference between open peril and named peril?
Open peril covers everything except what the policy specifically lists as excluded. Named peril only covers the 16 perils listed in the policy. Your dwelling gets open peril protection; your personal property gets the more limited named peril coverage under a standard HO-3.What Is HO-3 Insurance? (Plain English)
HO-3 is a form number created by the Insurance Services Office (ISO) that defines what a standard homeowners policy covers. The "HO" stands for homeowners, and the "3" designates this specific form — the most widely used of the eight homeowners forms (HO-1 through HO-8).The key feature that makes HO-3 the industry standard is the split coverage approach. Your house itself — the dwelling, garage, fence, shed — gets open peril coverage. That means the policy covers any cause of loss unless the policy specifically says it does not. Your personal belongings inside the house get named peril coverage, which only pays for the 16 specific causes of loss listed in the policy.This split matters because it determines how claims get decided. If a tree falls on your roof, the dwelling claim is straightforward — tree damage is not excluded, so it is covered. If that same tree somehow ruins your laptop inside, the personal property claim has to match one of the 16 named perils (in this case, falling objects — which is listed).What an HO-3 Policy Covers
Every HO-3 policy is built around six coverage sections, labeled A through F. Understanding what each one does — and its limits — is the foundation of knowing whether your policy is adequate.Coverage A: Dwelling (Open Peril)
- Covers the physical structure of your home — walls, roof, built-in appliances, attached garage, foundation
- Open peril basis: everything is covered unless specifically excluded (flood, earthquake, wear and tear, intentional damage)
- Should be set at 100% of your home's replacement cost, not market value
- Includes permanently installed fixtures: plumbing, electrical, HVAC, cabinetry
Coverage B: Other Structures
- Detached garage, fence, shed, pool, guest house, workshop
- Typically set at 10% of Coverage A (so $30,000 on a $300K policy)
- Same open peril basis as the dwelling
Coverage C: Personal Property (Named Peril)
- Furniture, electronics, clothing, appliances — everything you own inside the home
- Named peril only: covers fire, lightning, windstorm, hail, explosion, smoke, theft, vandalism, falling objects, water damage from plumbing, and 10 other listed perils
- Typically set at 50-70% of Coverage A
- Sub-limits apply to jewelry ($1,500), firearms ($2,500), cash ($200), electronics, and collectibles — schedule high-value items separately
Coverage D: Loss of Use
- Pays additional living expenses if your home is uninhabitable due to a covered loss
- Hotel, meals, temporary rental — the difference between your normal costs and what you actually spend
- Typically 20-30% of Coverage A with a 12-month time limit
Coverage E: Personal Liability
- Covers lawsuits if someone is injured on your property or you cause damage to someone else's property
- Standard limit: $100,000-$300,000 (most agents recommend $300K minimum)
- Includes legal defense costs on top of the limit
- Does not cover business activities, intentional acts, or motor vehicle liability
Coverage F: Medical Payments
- Pays medical bills for guests injured on your property regardless of fault
- Standard limit: $1,000-$5,000 per person
- No-fault coverage — designed to handle small injuries without a lawsuit
What HO-3 Does NOT Cover
The exclusions list is what makes open peril coverage work — instead of listing what is covered, the policy lists what is not. These exclusions apply to every standard HO-3 regardless of carrier.| Exclusion | What It Means | How to Fill the Gap |
|---|---|---|
| Flood | Surface water, storm surge, rising water | Separate flood policy (NFIP or private) |
| Earthquake/earth movement | Earthquake, landslide, sinkhole, mine subsidence | Earthquake endorsement ($50-$200/year in TX) |
| Wear and tear | Gradual deterioration, rust, rot, settling | Maintenance — not insurable |
| Mold (beyond sublimit) | Most TX policies cap mold at $5K-$10K | Mold endorsement for higher limits |
| Sewer/water backup | Drain backup, sump pump failure | Water backup endorsement ($40-$100/year) |
| Intentional damage | Damage you cause on purpose | Not insurable |
| Government action | Condemnation, code enforcement demolition | Ordinance or law endorsement |
| Nuclear hazard / war | Standard uninsurable perils | Not available |
HO-3 vs Other Homeowners Policy Forms
The ISO defines eight homeowners forms. HO-3 is the standard, but three others come up regularly in Texas.| Form | Dwelling Coverage | Personal Property | Who Uses It |
|---|---|---|---|
| HO-3 | Open peril | Named peril (16 perils) | Most homeowners (80%+) |
| HO-5 | Open peril | Open peril | High-value homes, premium tier |
| HO-6 | Walls-in only | Named peril | Condo owners |
| HO-8 | Named peril, ACV | Named peril | Older homes where replacement cost exceeds market value |
How Much Does an HO-3 Policy Cost in Texas?
Texas is one of the most expensive states for homeowners insurance. The average HO-3 premium in Texas runs $3,500-$4,500/year for a $300,000 dwelling — roughly 40% above the national average. Coastal counties, hail-prone areas, and homes with older roofs pay significantly more.What Drives HO-3 Cost in Texas
- Location: Coastal and North Texas hail corridor homes cost 50-100% more than Central Texas
- Roof age and material: A 15+ year roof triggers ACV-only coverage or higher premiums. See how roof age affects your policy
- Wind/hail deductible: Choosing 2% vs 1% can save $400-$800/year but raises your out-of-pocket by thousands
- Claims history: A prior claim within 3-5 years increases premium 20-40%
- Credit-based insurance score: Texas allows credit scoring — a strong score can save 15-25%
Common HO-3 Endorsements
Endorsements modify what your base HO-3 covers. These are the most common add-ons Texas homeowners should evaluate.Worth Adding for Most Texas Homeowners
- Water backup/sewer: $40-$100/year. Covers sump pump failure and drain backup — not included in base HO-3.
- Service line coverage: $25-$50/year. Covers underground water, sewer, and electrical lines from your home to the street.
- Equipment breakdown: $25-$75/year. Covers HVAC compressor, water heater, electrical panel failures due to power surge or mechanical breakdown.
- Scheduled personal property: Varies. Covers jewelry, watches, art, firearms at appraised value with no deductible. Essential if you own items above the standard sub-limits.
- Replacement cost on personal property: Upgrades Coverage C from ACV (depreciated) to replacement cost (new). Costs 10-15% more on the Coverage C portion.
The Bottom Line
An HO-3 is what most people mean when they say homeowners insurance. It covers your dwelling against nearly everything, your personal property against 16 named perils, and provides liability protection if someone gets hurt on your property. The gaps — flood, earthquake, mold above the sublimit, water backup — are fillable with endorsements or standalone policies. The biggest variable in Texas is not the form, it is the carrier. The same HO-3 coverage from two different companies can differ by $500-$1,200/year, which is why comparing quotes from multiple carriers matters.Frequently Asked Questions
What does HO-3 stand for?
HO stands for Homeowners and 3 is the form number assigned by the Insurance Services Office (ISO). The number designates the specific coverage structure — open peril on the dwelling, named peril on personal property.Is HO-3 the same as a standard homeowners policy?
Yes. HO-3 is the most common homeowners insurance form in the United States. When a lender requires homeowners insurance at closing, they are typically requiring an HO-3 or equivalent.What is the difference between HO-3 and HO-5?
HO-3 covers personal property on a named peril basis (16 specific causes of loss). HO-5 upgrades personal property to open peril, covering everything unless excluded — the same level of protection your dwelling already gets. HO-5 typically costs 15-30% more.Does HO-3 cover flood damage?
No. Flood is excluded from every HO-3 policy regardless of carrier. You need a separate flood insurance policy through NFIP or a private flood carrier. Even if you are not in a flood zone, 25% of flood claims come from low-risk areas.How much HO-3 coverage do I need?
Coverage A (dwelling) should equal 100% of your home's replacement cost — what it would cost to rebuild from the ground up, not your mortgage balance or market value. Your agent or carrier can run a replacement cost estimator. Personal property coverage is typically set at 50-70% of the dwelling amount.
EJ Nadolny is the founder and principal agent of Canopy Insurance Texas, an independent insurance agency based in San Antonio. With deep expertise in home, auto, commercial, and specialty insurance lines, EJ leads a team that represents 18+ carriers across Texas. His approach focuses on finding the right coverage at the right price by shopping the market on behalf of every client — not pushing a single carrier’s products.
