In this guide
An HO-3 is the most common homeowners policy. It covers your house against all causes of loss except those specifically excluded, but covers your belongings only for listed perils. An HO-5 is the more comprehensive form: it generally covers both the house and your belongings against all perils except exclusions, often at replacement cost. That broader protection usually comes with a higher premium and tighter eligibility.
Key takeaways
- Both HO-3 and HO-5 are designed for owner-occupied single-family homes.
- The biggest difference is how personal property is covered: named perils on an HO-3, open perils on an HO-5.
- HO-5 forms often value belongings at replacement cost, while HO-3 policies may value them at actual cash value unless you add an endorsement.
- Neither form covers flood or earthquake. Both have exclusions and limits.
- Forms and wording vary by insurer and state. Always read your policy.
The basics: what "HO" forms mean
"HO" stands for homeowners. Insurers use standardized forms, often based on those developed by Insurance Services Office (ISO), though wording varies by company and state. The Insurance Information Institute (Triple-I) lists HO-3 as the most popular policy. The NAIC data definitions also show HO-3 accounting for most homeowners policies. Other forms include HO-2 (named perils), HO-4 (renters), HO-6 (condos) and HO-8 (older homes).
The key to understanding HO-3 versus HO-5 is two terms:
- Open perils (all-risk): everything is covered unless the policy says it's excluded.
- Named perils: only the causes of loss listed in the policy are covered, such as fire, lightning, windstorm, hail, theft and vandalism.
New to the subject? Start with our overview, homeowners insurance explained.
HO-3 vs. HO-5 side by side
| Feature | HO-3 (Special form) | HO-5 (Comprehensive form) |
|---|---|---|
| Dwelling and other structures | Open perils | Open perils |
| Personal belongings | Named perils | Open perils |
| Typical valuation of belongings | Often actual cash value, with replacement cost available as an option | Typically replacement cost |
| Typical cost | Lower | Higher |
| Availability | Widely offered | Offered by fewer insurers, and often for newer or higher-value homes |
| Standard exclusions | Flood, earthquake, wear and tear, neglect and others | Same general exclusions |
Triple-I describes the HO-5 as providing the most coverage of the policy forms, usually at a higher price. The NAIC likewise describes the HO-5 as an open perils form for both the structure and contents. Details vary, so compare actual policy language, not just the form number.
What an HO-3 covers
An HO-3 typically includes these parts:
- Dwelling (Coverage A): the house and attached structures, on an open perils basis.
- Other structures (Coverage B): detached garage, shed or fence, usually a percentage of the dwelling limit.
- Personal property (Coverage C): belongings, covered for named perils such as fire, theft and certain weather events.
- Loss of use (Coverage D): extra living costs if the home can't be lived in after a covered loss.
- Personal liability and medical payments to others (Coverages E and F).
The practical effect: a loss to your house from a cause that isn't excluded is generally covered, but your belongings are protected only if the cause appears on the list of covered perils.
What an HO-5 adds
The HO-5 uses the same structure, but extends open perils protection to your belongings. It may also come with higher or broader limits for certain items, and more often includes replacement cost for personal property. That can matter if, for instance, an item is damaged by something that's not on the HO-3's named list.
Because insurers vary, an HO-3 with the right endorsements can sometimes come close to an HO-5, while some HO-5 policies still have sublimits. Typical sublimits apply to jewelry, firearms, cash, electronics and collectibles, and apply under both forms. Our guide to replacement cost vs. actual cash value explains why valuation matters at claim time.
An example of the difference
Imagine an unusual event damages both a wall and a sofa, and the cause isn't on the HO-3's list of named perils for belongings. Under an HO-3, the wall is covered unless the cause is excluded, but the sofa may not be, because belongings are covered only for named causes. Under an HO-5, both the wall and the sofa are covered unless the cause is excluded. Real results depend on exact wording and exclusions, such as gradual leaks and wear. Read does homeowners insurance cover water damage? for more detail.
Good to know: Many everyday losses, such as dropping a camera, are excluded or limited on both forms unless you add coverage like scheduled personal property. Open perils doesn't mean everything.
What neither form covers
- Flood. Triple-I and FEMA note that standard homeowners policies don't cover flood. It requires a separate policy. See flood insurance explained.
- Earthquake. Available as an endorsement or separate policy. See earthquake insurance.
- Poor maintenance, wear and tear, and neglect.
- Some code upgrade costs, unless you add ordinance or law coverage.
- Business property and some home business liability.
Who might consider an HO-5?
This isn't personal advice, but these are the situations where people often compare the two forms:
- A home with high-value belongings, such as electronics, furniture or collections
- A newer or well-maintained home, since HO-5 eligibility can be stricter
- Owners who want fewer gaps in how belongings are covered and who are comfortable with a higher premium
An HO-3 may be enough if you have a modest amount of belongings, or if you prefer to keep your premium lower and can add replacement cost coverage for contents. Some insurers don't offer the HO-5 at all, and some limit it by age or value of the home. Ask for both options in your quote.
Whatever form you pick, your dwelling limit matters at least as much. See how much homeowners insurance you need. Getting quotes for each form from several insurers lets you see the actual difference in price and coverage for your own home.
Other forms you may see
- HO-2: named perils for both house and belongings.
- HO-4: renters insurance. See renters insurance guide.
- HO-6: condo owners. See condo insurance (HO-6).
- HO-8: older homes where replacement cost may exceed market value.
Frequently asked questions
Is HO-5 always better than HO-3?
Not necessarily. HO-5 gives broader protection for belongings, but it often costs more and may not be offered for every home. Whether it's worth it depends on your belongings, budget and the specific policy wording.
Does an HO-3 cover my belongings at all?
Yes, for the perils named in the policy, such as fire, lightning, windstorm and theft. It's the type of cause, not the item, that decides coverage.
Can I upgrade from HO-3 to HO-5 later?
You can ask your insurer at renewal or anytime. Insurers may inspect the home or apply eligibility rules, and not every insurer offers HO-5.
Do HO-5 policies cover flood?
No. Flood damage is excluded from standard homeowners forms, including HO-5. Flood coverage is bought separately.
Will my mortgage lender care which form I choose?
Lenders generally require enough dwelling coverage to protect their interest, and may have specific requirements. Ask your lender what it needs.
Sources
- Insurance Information Institute – Are there different types of policies?
- Insurance Information Institute – Am I covered?
- NAIC – Homeowners insurance
- NAIC – A Consumer's Guide to Home Insurance
- FEMA – Flood insurance
General information only. This guide explains general concepts and is not insurance, legal or financial advice. Rules and prices vary by state and insurer. Check your policy documents and speak to a licensed insurance professional or your state insurance department about your situation.