Guides
The HO-3 policy explained: coverages, exclusions and gaps
How the standard HO-3 special form works: open perils on the house, named perils on belongings, the 80% rule, key exclusions and the gaps endorsements fill.
The HO-3, ISO's "Special Form" (HO 00 03), insures your house and other structures against any direct physical loss the policy does not exclude, insures your belongings against 16 listed perils, and adds loss of use, personal liability and medical payments to others. It is the standard policy for an owner-occupied house: the NAIC's data for 2023, published in July 2026, show it on about 79.5% of owner-occupied house-years, at an average premium of $1,737 (NAIC).
The form details below come from the May 2011 edition (HO 00 03 05 11), which the Maine Bureau of Insurance hosts publicly. Your insurer's own form and your state's amendatory endorsement control, so treat this as a map and read your own policy.
How the HO-3 is organized
Section I insures property (Coverages A through D). Section II insures your liability (Coverages E and F). Conditions and exclusions follow each section. The limits for A, C, D, E and F sit on your declarations page; the form itself caps B at 10% of A.
| Coverage | What it insures | Limit |
|---|---|---|
| A, Dwelling | The house, attached structures, and materials on site for repairs; not land | Amount on the declarations page |
| B, Other structures | Detached garage, shed, fence | The form says it will not be more than 10% of Coverage A, and using it does not reduce A |
| C, Personal property | Belongings you own or use, anywhere in the world | Amount on the declarations page |
| D, Loss of use | Added living costs, lost rent, civil authority closure | Amount on the declarations page |
| E, Personal liability | Damages you owe for injury or damage to others, plus a defense | The limit you choose |
| F, Medical payments | Guests' medical costs regardless of fault | The limit you choose, per person per accident |
The Maine Bureau of Insurance's consumer guide (updated September 2021) lists typical limits of 10% of Coverage A for other structures, 50% for personal property and 20% for loss of use, and notes that many companies sell increases, generally in 10% steps (Maine Bureau of Insurance). Your policy may use other percentages. For each coverage in depth, see The six coverages in a homeowners policy, A through F.
Open perils on the house, named perils on belongings
Coverages A and B insure "direct physical loss" unless an exclusion applies; this is open perils coverage. Coverage C pays only for named perils: fire or lightning, windstorm or hail, explosion, theft, vandalism, falling objects, accidental discharge of water, freezing, and a handful more. named perils vs open perils coverage lists all 16 and shows where their conditions bite.
Open perils is only as broad as its exclusions, and the HO-3 has three layers of them:
- Exclusions with a concurrent-cause lead-in. Ordinance or law, earth movement, water (flood, surface water, sewer and drain backup, sump overflow, groundwater), off-premises power failure, neglect, war, nuclear hazard, intentional loss and governmental action are excluded "regardless of any other cause or event contributing concurrently or in any sequence." That wording is an anti-concurrent causation clause clause.
- Exclusions with an ensuing-loss exception. Weather conditions that contribute to an excluded cause, acts or decisions of any person or body, and faulty, inadequate or defective planning, workmanship, materials or maintenance are excluded, but ensuing loss that nothing else excludes is covered.
- Carve-outs inside the perils section. Collapse (except under the Additional Coverage), freezing when you did not use reasonable care to heat the building or drain the system, vandalism after 60 days of vacancy, mold and wet rot (with a narrow exception for hidden damage after a covered water discharge), wear and tear, mechanical breakdown, rust, settling and cracking of foundations, birds, rodents and insects, and animals you keep.
See what homeowners insurance doesn't cover for the plain-English version.
Additional coverages that ride along
Several smaller coverages sit inside Section I. The dollar figures below are the May 2011 form's; later editions raised some, and your insurer's form may differ.
| Additional coverage | What the 2011 form provides |
|---|---|
| Debris removal | Included in the limit; an extra 5% of that limit if the limit is exhausted |
| Tree debris removal | Up to $1,000 per loss, $500 per tree, when a tree damages a structure or blocks a driveway |
| Trees, shrubs and plants | Up to 5% of Coverage A, $500 per plant, for fire, theft and a few other perils, not windstorm |
| Ordinance or law | Up to 10% of Coverage A toward code-upgrade costs |
| Loss assessment | $1,000 for your share of an association's assessment |
| Fire department service charge | Up to $500, with no deductible |
Details are in the additional coverages hiding in your policy.
How the HO-3 pays: replacement cost, ACV and the 80% rule
Belongings, awnings, carpeting, household appliances and structures that are not buildings are paid at actual cash value unless you add an endorsement. Buildings are paid at replacement cost, with a condition: you must insure the building for at least 80% of its full replacement cost at the time of loss.
If you carry less than 80%, the form pays the greater of the actual cash value of the damaged part or the proportion of the repair cost that your limit bears to 80% of replacement cost. The test leaves out foundations below the lowest basement floor and underground pipes and wiring. The form also pays no more than ACV until repair or replacement is complete, except when the repair is under both 5% of the limit and $2,500, and you can claim ACV first and notify the insurer within 180 days that you intend to repair.
A hypothetical example. Say rebuilding your house would cost $400,000 and your Coverage A limit is $280,000, or 70%. Eighty percent of replacement cost is $320,000. A kitchen fire causes $50,000 of repair cost at new prices. Because $280,000 is less than $320,000, the policy pays the greater of the damaged part's ACV or $50,000 × ($280,000 ÷ $320,000), which is $43,750, before the deductible. The $6,250 shortfall is yours. Had you insured to $320,000, the claim would pay in full, less the deductible. How the deductible enters the formula depends on the edition. The coinsurance and insurance-to-value calculator runs your own numbers, and How much dwelling coverage do I need? covers setting the limit.
Where the HO-3 leaves gaps
| Gap | Common fix | ISO endorsement (insurers may use their own) |
|---|---|---|
| Belongings paid at ACV | Personal property replacement cost | HO 04 90 |
| Dwelling limit falls short in a total loss | Extended or guaranteed replacement cost, or a specified additional amount | HO 04 20 |
| Code-upgrade limit of 10% is thin | Higher ordinance or law limit | HO 04 77 |
| Sewer or drain backup, sump overflow | Water backup coverage | HO 04 95 |
| Jewelry, art or collectibles exceed special limits | Scheduled personal property | HO 04 61 |
| $1,000 loss assessment limit | Higher limit if you belong to an association | HO 04 35 |
Flood and earthquake are separate policies: see does homeowners insurance cover flooding?. For the broader menu of add-ons, read homeowners endorsements worth considering.
Which edition do you have?
ISO's March 2022 revision changed the base forms, according to Insurance Journal's June 2021 summary: many Coverage C special limits that had not moved in 20 years were raised, replacement cost is paid without replacement when real property damage is $5,000 or less, and Coverage D now reaches expenses of resident relatives and others under 21 in your care. Credit card and forgery coverage was dropped from the base forms (Insurance Journal). Insurers adopt editions on their own timetable, so the edition date on your declarations page decides which text applies.
The claim conditions you agree to
The 2011 form requires prompt notice, protection of the property, an inventory of damaged personal property and a signed, sworn proof of loss within 60 days after the insurer asks. Loss is payable 60 days after proof of loss and agreement, judgment or an appraisal award. The form also says suit must be started within two years after the date of loss. State law often overrides that and the claim-handling deadlines, so check deadlines to sue over a home insurance claim before you assume a date.
Checking your own HO-3
- Find the form number and edition on the declarations page.
- Compare Coverage A with a current rebuild estimate, since the 80% rule turns on it.
- Read the deductible lines, including any separate wind, hail or hurricane deductible.
- Look for contents settlement: ACV or replacement cost.
- List endorsements and match each one to a gap in the table above.
Key takeaways
- The HO-3 insures the house on open perils and belongings on 16 named perils, plus loss of use, liability and medical payments.
- Open perils still carries exclusions for flood, earth movement, sewer backup, wear and tear, faulty maintenance and more.
- Buildings are paid at replacement cost only if you insure to at least 80% of rebuild cost; below that, the payment shrinks proportionally.
- Belongings are paid at actual cash value unless you add replacement cost, and valuables hit special limits.
- The form, the edition and your endorsements decide what is covered, so read your own declarations page.