HO-3 Policy: The Standard Homeowners Insurance Form

The HO-3 is the most widely purchased homeowners insurance form in the United States, covering owner-occupied single-family dwellings under a hybrid structure that applies open-perils coverage to the dwelling and named-perils coverage to personal property. Understanding how this form is structured — and where its coverage boundaries fall — is essential for property owners evaluating whether a standard policy meets their risk exposure. This page covers the HO-3's definition, operative mechanism, common claim scenarios, and the decision thresholds that determine when a different form may be appropriate.

Definition and scope

The HO-3, formally designated as the Special Form, is one of eight standardized homeowners policy forms developed by the Insurance Services Office (ISO), a subsidiary of Verisk Analytics that publishes model policy language used by insurers across the country. ISO periodically revises these forms; the HO 00 03 designation appears in editions including the 2000 and 2011 versions, which established the framework most state-approved policies currently track.

Under the HO-3, coverage applies to four primary components:

Dwelling (Coverage A) — the physical structure of the home, covered on an open-perils (all-risk) basis
Other Structures (Coverage B) — detached garages, fences, and similar structures, also on open-perils basis; typically set at 10% of Coverage A limits
Personal Property (Coverage C) — contents, covered on a named-perils basis against 16 enumerated perils
Loss of Use (Coverage D) — additional living expenses when the home is uninhabitable due to a covered loss; commonly capped at 20–30% of Coverage A

The distinction between open-perils and named-perils is fundamental. Under open-perils, any cause of loss is covered unless specifically excluded. Under named-perils, only the causes listed in the policy trigger coverage. This asymmetry defines the HO-3's character. A detailed breakdown of that distinction is available at Named Perils vs. Open Perils.

The National Association of Insurance Commissioners (NAIC) tracks the HO-3 as the dominant form in residential property insurance, with the Special Form consistently representing the majority of homeowners policies written nationally. Liability protection (Coverage E) and medical payments to others (Coverage F) are also bundled into the standard HO-3 form, as outlined in Liability Coverage for Homeowners.

How it works

When a covered loss occurs, the HO-3's claims process follows a defined sequence governed by both policy contract terms and state insurance regulations administered through each state's department of insurance.

Dwelling losses are evaluated first by determining whether the cause of loss is excluded. If no exclusion applies, the insurer proceeds to valuation. HO-3 policies are typically written on a replacement cost value (RCV) basis for the dwelling, meaning the insurer pays the cost to repair or rebuild without deducting for depreciation — provided the policyholder rebuilds and meets the policy's insurance-to-value threshold. Policies requiring coverage at 80% or more of full replacement cost before paying full RCV claims operate under what is commonly called the coinsurance clause.

Personal property losses require the policyholder to demonstrate that the loss resulted from one of the 16 named perils. Standard named perils in the ISO HO-3 form include fire, lightning, windstorm or hail, explosion, riot, aircraft, vehicles, smoke, vandalism, theft, falling objects, weight of ice or snow, accidental discharge of water, sudden tearing apart of heating systems, freezing of plumbing, and sudden damage from electrical current. Personal property under a base HO-3 is paid at actual cash value (ACV) unless the policyholder has added a replacement cost endorsement — a critical distinction covered in depth at Replacement Cost vs. Actual Cash Value.

The deductible applies per occurrence and is subtracted from the settlement before payment. Separate wind/hail or hurricane deductibles, expressed as a percentage of Coverage A rather than a flat dollar amount, are standard in coastal states and are addressed in full at Home Insurance Deductibles.

Common scenarios

Fire damage to the dwelling: Fire is a covered open peril under Coverage A. If a kitchen fire spreads to the structure, the insurer pays to repair or rebuild the dwelling up to Coverage A limits minus the deductible, at replacement cost (if insured to value). The same loss also triggers Coverage D if the home becomes uninhabitable.

Theft of personal property: Theft is one of the 16 named perils under Coverage C. A stolen laptop is covered, but the base HO-3 pays ACV — meaning depreciation is deducted. High-value electronics or jewelry may be subject to sub-limits; for jewelry, the ISO form's base sub-limit is typically $1,500 for theft, requiring a scheduled endorsement for broader protection. See Scheduled Personal Property for endorsement options.

Water damage from a burst pipe: Sudden and accidental discharge of water from a plumbing system is a named peril under Coverage C and also covered under open perils for Coverage A. Gradual leaks and seepage are excluded. Flood — defined as water rising from an external source — is universally excluded from HO-3 policies and requires a separate policy through the FEMA National Flood Insurance Program (NFIP) or a private flood insurer.

Wind damage: Windstorm and hail damage to the dwelling is covered under open perils. However, exclusions for surface water or resulting water intrusion through an opening created by wind may be contested. Wind and hail claims are among the highest-volume homeowners claims nationally, as noted by NAIC market data.

Decision boundaries

The HO-3 is appropriate for owner-occupied, single-family homes that are the policyholder's primary residence. Several structural situations require a different form:

Renters require the HO-4 form, which covers personal property and liability but excludes dwelling coverage — see HO-4 Renters Insurance.
Condominium unit owners use the HO-6 form, which covers interior improvements and personal property but not the exterior structure maintained by the condo association — see HO-6 Condo Insurance.
Owners seeking broader personal property coverage can upgrade to the HO-5 (Comprehensive Form), which extends open-perils coverage to personal property as well as the dwelling — see HO-5 Policy Explained.
Older homes with construction costs that significantly exceed market value may be better served by the HO-8 (Modified Coverage Form), which uses repair cost or market value rather than full replacement cost.
Vacant or unoccupied properties generally fall outside HO-3 eligibility after 30–60 consecutive days of vacancy (exact threshold varies by insurer), requiring a Vacant Home Insurance policy.
Seasonal or secondary residences may not qualify under standard HO-3 underwriting guidelines and often need a separate form or endorsement.

The complete spectrum of ISO homeowners forms — HO-1 through HO-8 — is mapped at Home Insurance Policy Forms: HO-1 to HO-8, which provides side-by-side classification of each form's coverage scope and eligible property types.

Insurers are not required to use ISO language verbatim; state regulators approve each insurer's filed forms, meaning policy language can vary. Policyholders should review the declarations page and policy jacket rather than relying solely on the ISO model form as a proxy for their actual coverage. The homeowners insurance policy structure page explains how to read the components of a filed policy.

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