An HO-3 policy is the most common homeowners insurance policy form in the United States. It covers your dwelling and other structures on an open-peril basis — meaning any cause of loss is covered unless the policy specifically excludes it — while covering your personal property on a named-peril basis, meaning belongings are covered only against the causes of loss listed in the policy.
How it works
The HO-3 (sometimes called a "special form" policy) bundles six coverages: dwelling (A), other structures (B), personal property (C), loss of use (D), personal liability (E), and medical payments to others (F). Its defining feature is the split peril structure: the structure of your home gets broad open-peril protection, while your belongings get the narrower named-peril list — typically 16 named perils including fire, windstorm, hail, theft, and vandalism.
Example (illustrative numbers): Suppose a hidden roof leak lets rainwater pour into a bedroom during a storm. Damage to the ceiling and walls ($12,000) falls under open-peril dwelling coverage and is covered unless an exclusion applies. A water-damaged dresser and rug ($1,500) must fit one of the named perils on the contents side to be paid — which they may, under windstorm-related provisions, depending on how the water entered. The split structure is why two parts of the same loss can be analyzed differently. Numbers are illustrative only.
Typical HO-3 exclusions on the dwelling side include flood, earthquake, neglect, and wear and tear. Flood and earthquake can be insured separately.
Why it matters for your policy
If you own a single-family home and haven't chosen a specialty policy, you almost certainly have an HO-3 — so its quirks are worth knowing:
- The burden-of-proof difference: On open-peril coverage, the insurer must point to an exclusion to deny a dwelling claim. On named-peril contents coverage, you must show the loss fits a listed peril. See named peril vs. open peril.
- Contents settlement: Many HO-3s settle personal property at actual cash value by default; a replacement cost endorsement is usually worth asking about.
- Upgrading: An HO-5 policy extends open-peril coverage to your belongings, often with replacement cost included — the main step up from an HO-3.
HO-3 is a standardized form concept, but carriers modify it with their own endorsements and state-specific language, so two HO-3s are not identical. Read the declarations page and endorsement list together.
Have questions about what your homeowners form actually covers? Better Choice Insurance Group is an independent agency based in St. Charles, Illinois, licensed in 14 states. We’ll explain your options in plain English and compare coverage across our carriers — free, no pressure.
Related terms
- HO-5 Policy — The premium homeowners form with open-peril coverage on both dwelling and contents.
- HO-6 Policy — The condo unit-owners form, designed to work alongside an association master policy.
- Named Peril vs. Open Peril — The two ways policies define which causes of loss are covered.
- Dwelling Coverage — Coverage A, the core structural protection in every HO-3.
- Exclusion — The list of causes of loss an open-peril policy carves out.
Frequently Asked Questions
Is an HO-3 policy 'full coverage' for my house?
It is broad, but not unlimited. The dwelling is covered against any peril not excluded, and the standard exclusions matter: flood, earthquake, wear and tear, and others are not covered. Your belongings are covered only against listed perils unless you upgrade. 'Full coverage' isn't a defined term in homeowners insurance - what counts is the form, limits, and endorsements.
What's the difference between an HO-3 and an HO-5?
An HO-3 covers your dwelling on an open-peril basis but your personal property on a named-peril basis. An HO-5 covers both on an open-peril basis, and usually includes replacement cost on contents. The HO-5 costs more and is typically offered on newer or well-maintained homes, but the claim-time difference can be significant.
Does an HO-3 policy cover flooding?
No. Flood - rising water from outside the home - is excluded on standard homeowners forms, including the HO-3. Flood insurance is purchased separately through the National Flood Insurance Program or private flood insurers. Water damage from inside sources, like a burst pipe, is generally covered, subject to policy terms.
Last reviewed: August 2026 · Reviewed by Evan Larson, Licensed Insurance Agent