By Rose Granados · Licensed Insurance Agent · Granados Insurance Agency
Two Texas home policies can look identical on paper and pay very differently after the same hailstorm. The difference is the policy form — HO-3 or HO-5. Here's what each one covers, how your belongings get valued, who has to prove the loss, and why Texans who remember HO-A and HO-B policies should look twice at what they have now.
An HO-3 covers your house on an open-perils basis but your belongings only against a list of named perils — an HO-5 covers both your house and your belongings on an open-perils basis, typically with replacement-cost valuation on contents. Open-perils coverage protects against events the policy doesn't specifically exclude, while named-perils coverage pays only for the events listed, according to the Texas Department of Insurance. That one difference decides two things Texans feel at claim time: how your belongings are valued after a hail or water loss, and who has to prove what caused the damage. If you don't know which form you have, it's printed on your declarations page — and a free review with our team is the fastest way to find out what it means for your home.
Here's a scene we see after every big Texas hailstorm: two neighbors on the same street, same storm, similar damage — and two very different claim experiences. One spends weeks documenting exactly what caused the damage to their belongings and then receives a depreciated check. The other lists what was damaged and gets it replaced. The difference usually isn't the adjuster, and it isn't luck. It's two characters on the declarations page: HO-3 versus HO-5.
We're a licensed Texas agency, and the policy form is one of the most misunderstood lines in the home policies we review. This guide explains, in plain English, what each form covers, how your belongings get valued after Texas hail and water claims, who carries the burden of proof, and the HO-A/HO-B history that still shapes how Texans think about coverage.
What Is an HO-3 Homeowners Policy?
The short answer: the HO-3 is the standard homeowners policy — it covers your house against almost everything, but your belongings only against a specific list of perils.
The HO-3, often called the "special form," is the policy most Texas homeowners have, whether they know it or not. It's the most popular homeowners form in the country, according to the Insurance Information Institute, and the NAIC puts a precise number on it: HO-3 policies accounted for nearly 79% (78.99%) of owner-occupied home exposures, according to the NAIC's 2022 homeowners insurance report.
A standard HO-3 bundles four protections, per the III: dwelling coverage for the structure itself, personal property coverage for your belongings, liability protection if someone is injured on your property, and additional living expenses if a covered loss forces you out of the home while it's repaired.
Here's the part that matters for this guide: the HO-3 has a split personality. Your dwelling is covered on an open-perils basis — protected against everything the policy doesn't specifically exclude. Your personal property, though, is covered on a named-perils basis — only the events printed on the list, such as fire, windstorm, hail, theft, and vandalism. If your belongings are damaged by something that isn't on that list, the contents portion of the claim isn't covered — and, as we'll get to, proving that a listed peril caused the loss is your job.
The HO-3 is genuinely solid coverage — the point isn't to talk you out of one, but to know which rules apply to which half of it. For the exclusions that apply to every standard policy, see our guide to what Texas home insurance doesn't cover.
In short: the HO-3 is the default American home policy — open perils on the house, named perils on the contents.
What Is an HO-5 Homeowners Policy?
The short answer: an HO-5 covers both your house and your belongings on an open-perils basis — and typically values your contents at replacement cost.
The HO-5, often called the "comprehensive form," takes the stronger of the HO-3's two coverage standards and applies it to the entire policy. Under an HO-5, your personal property gets the same open-perils treatment as your dwelling: it's covered against any cause of loss the policy doesn't specifically exclude, rather than only a printed list of perils.
The structure of the policy looks familiar — the same four pillars of dwelling, personal property, liability, and additional living expenses. What changes is the rulebook applied to your belongings: broader perils, typically replacement-cost valuation instead of depreciated actual cash value, and — the piece almost nobody talks about — a friendlier burden of proof when the cause of a loss is murky.
To be clear about what an HO-5 is not: it isn't a different tier of service — it's a policy form, a different contract on the same house. And open perils never means all perils: the listed exclusions still apply, which is why the exclusions page is the part worth reading first.
In our experience working with homeowners across Pearland and the Texas Gulf Coast, the HO-5 conversation usually starts after a claim — the moment someone learns what "actual cash value on contents" means when depreciation comes off a payout. The better time to have that conversation is before the storm, not after it.
In short: the HO-5 is the comprehensive form — open perils on everything, and your belongings typically replaced at today's prices.
What's the Difference Between Open Perils and Named Perils?
The short answer: open-perils coverage pays unless the policy specifically excludes the cause of loss; named-perils coverage pays only if the cause is on the policy's list.
The Texas Department of Insurance draws the line cleanly in its home insurance shopping guide: all-risk (open-perils) policies cover the events the policy doesn't specifically exclude, while named-perils policies cover only the events listed in the policy.
Think of it as two different default settings. A named-perils contract starts from "not covered" — coverage switches on only when you can point to a listed peril like fire, hail, or theft. An open-perils contract starts from "covered" — coverage switches off only when the insurer can point to a specific exclusion like flood, earth movement, or gradual wear. Same house, same storm, opposite starting positions.
Here's how the two forms line up side by side:
| What's different | HO-3 (special form) | HO-5 (comprehensive form) |
|---|---|---|
| Dwelling coverage basis | Open perils | Open perils |
| Personal property coverage basis | Named perils only | Open perils |
| Contents valuation default | Often actual cash value (depreciated) unless endorsed | Typically replacement cost |
| Burden of proof on a contents claim | You show a listed peril caused the loss | Insurer must point to an applicable exclusion |
| Typical fit | Budget-conscious coverage; the market default | Newer or well-maintained homes; higher-value contents |
One boundary applies to both columns: neither an HO-3 nor an HO-5 covers flood. Flood is always a separate policy — NFIP coverage caps at $250,000 for the building and $100,000 for contents and typically carries a roughly 30-day waiting period, per the Insurance Information Institute — and our Texas flood insurance guide walks through that decision on its own.
In short: the perils basis is the engine of the whole HO-3 vs HO-5 debate — everything else in this article flows from that one contract setting.
How Is Personal Property Covered Under HO-3 vs HO-5?
The short answer: both forms give your belongings a limit of roughly 50–70% of your dwelling coverage — but they differ on which perils apply and, usually, on how the payout is calculated.
Start with the limit, because it's the same story on either form: personal property coverage is typically set at 50 to 70 percent of the insurance on the structure, according to the Insurance Information Institute. On a home insured for $350,000, that's $175,000–$245,000 riding on your furniture, clothing, electronics, and everything else you own.
The differences are the two dials behind that limit. Dial one is perils: under an HO-3, your belongings are protected only against the named list; under an HO-5, they get open-perils protection. Dial two is valuation: contents can be valued at actual cash value — replacement cost minus depreciation — or at replacement cost, per the III. Base HO-3 policies commonly settle contents at actual cash value unless a replacement-cost endorsement is added, while HO-5 policies typically build replacement-cost contents in.
In our experience, Texas hail and water claims are exactly where those dials show up. The roof and drywall get rebuilt the same way under either form — it's the contents line of the claim where an HO-3 household and an HO-5 household can walk away with very different checks, not because the storm was different, but because the valuation method was.
Picture a supply line that lets go while you're at work — a routine Texas water claim. Say the soaked contents — sofa, rug, media console, and electronics — would cost $12,000 to replace new. Under a base HO-3 that settles contents at actual cash value, depreciation comes off first: five-to-ten-year-old furnishings might be valued at half or less of today's prices, so the contents portion could land closer to $5,000–$6,000 before your deductible. Under an HO-5 with replacement-cost contents, the same claim is settled at what it costs to replace the items new — the full $12,000, less the deductible.
These figures are an illustrative example, not a quote or a promised payout — every claim is adjusted on its own facts and policy terms. The mechanism, though, is exactly how the two forms diverge.
Valuation is a deep enough topic that we gave it its own guide — how depreciation is calculated, what recoverable depreciation means, and how to endorse your way to replacement cost: see replacement cost vs actual cash value in Texas.
In short: same contents limit either way — but the HO-5 usually changes both what's covered and what the check is worth.
Who Has to Prove the Cause of Loss at Claim Time?
The short answer: with named-perils coverage, you prove a listed peril caused the damage; with open-perils coverage, the insurer has to point to an exclusion that applies.
This is the difference almost no one thinks about until they're living it. As a practical matter, the policy form decides who starts a claim conversation holding the burden of proof — and after a Texas storm, when the cause of damage is often genuinely ambiguous, that starting position matters.
Under the HO-3's named-perils contents coverage, the claim works like this: you discover damaged belongings, and coverage turns on whether a listed peril caused it. Water-stained boxes in a closet after a stormy month — was that wind-driven rain through storm damage, or a slow leak that had been going for weeks? Under named perils, the ambiguity works against the claim, because demonstrating that a covered peril did it is your side of the table.
Under an HO-5's open-perils coverage, the starting presumption flips: sudden, accidental damage to your property is covered unless the insurer identifies a specific exclusion that applies — flood, earth movement, long-term seepage, wear and tear, and the rest of the printed list. You still document the loss, and exclusions still have teeth. But when the cause is murky, the policyholder isn't the one who has to solve the mystery to get paid.
An HO-5 is not a blank check — no policy form is. The honest framing is this: on clear-cut claims, the two forms often land in the same place; on messy ones, the open-perils policyholder starts from "covered" and the named-perils policyholder starts from "prove it."
In short: the burden of proof is the quiet, structural advantage of open-perils coverage — and it's worth as much as the broader peril list.
How Much More Does an HO-5 Typically Cost?
The short answer: typically modestly more than a comparable HO-3 — you're paying for stronger contents treatment — and the only number that means anything is a quote on your own home.
We're deliberately not printing an "HO-5 costs X% more" figure here, because there isn't a reliably published one — the difference depends on your home's age and construction, your roof, your claims history, your deductibles, and the contents limits and endorsements you choose. Any specific delta you see online is a guess dressed up as a statistic, and we don't publish guesses.
What we can anchor is the backdrop. The average Texas homeowners premium was about $2,397 per year, according to 2022 NAIC data published by the Insurance Information Institute in May 2025 — a statewide average across all policy forms, not a quote for your home. When the base premium is that significant, the incremental cost of stronger contents coverage is usually a modest share of the total — and it buys protection on the half of the policy where Texas claims most often disappoint people. For what actually drives that base premium, see our guide to how much home insurance costs in Texas.
The honest way to price the upgrade is the boring one: quote your own home both ways — HO-3 as it stands, HO-5 or an endorsed HO-3 alongside it — and look at the real difference on your address. That's a free, no-obligation review with our team, and it takes one conversation.
In short: think "modest premium difference for materially stronger contents coverage" — then verify it with a real quote instead of an internet average.
Which Texas Homes Qualify for an HO-5?
The short answer: plans generally reserve the HO-5 for newer or well-maintained homes — eligibility rules vary, so the only way to know is to ask.
The HO-5 is positioned as a premium form, and underwriting treats it that way. As a general pattern, plans offer it on homes that present lower risk: newer construction, a roof with plenty of life left, updated systems, and a clean recent claims history. An older home isn't automatically shut out — but the older the roof and the systems, the more likely the answer is an HO-3 with endorsements instead.
Signals that an HO-5 conversation is worth having for your home:
Newer construction
Recently built homes are the cleanest HO-5 candidates — newer materials, current code, fewer underwriting questions.
A roof with life left
In hail country, roof age drives underwriting. A newer roof helps both eligibility and pricing on any Texas form.
Updated systems
Modernized wiring, plumbing, and HVAC make a well-kept older home look like a newer one on paper.
Higher-value contents
The more your belongings are worth, the more the HO-5's open-perils, replacement-cost treatment is worth to you.
Clean claims history
Few or no recent claims keeps the premium form on the table and the pricing reasonable.
You don't want a proof fight
If documenting the cause of a messy loss sounds miserable, the HO-5's burden-of-proof advantage is built for you.
Eligibility rules differ from plan to plan and change over time, so treat the pattern above as a guide, not a verdict. Confirming whether your home qualifies — and whether an endorsed HO-3 gets you the same outcome — is a two-minute part of the free coverage review we do for Texas homeowners.
In short: newer and well-maintained homes typically qualify; everyone else should ask before assuming either way.
What Were Texas HO-A and HO-B Policies?
The short answer: HO-A and HO-B were Texas's own standardized policy forms — today's policies follow the national HO-3/HO-5 pattern instead, which is exactly why the form line on your policy matters again.
If you've owned a Texas home long enough, you remember when the policy form question had a uniquely Texan answer. For years, homeowners policies sold in Texas were standardized state forms, and nearly everyone had one of the same few contracts: the HO-A, a bare-bones named-perils form that generally paid claims at actual cash value, and the HO-B, the broader form most Texans actually carried, which covered more perils and paid most losses on a replacement-cost basis. "I have an HO-B" was shorthand for "I have good coverage," and plenty of longtime Texans still use it that way.
That era ended. After a wave of water-damage claims in the early 2000s, the Texas market moved away from mandatory standardized forms, and insurers began selling their own filed policy language — most of it built on the national HO-3 and HO-5 pattern. The Texas Department of Insurance's shopping guide makes the modern reality plain: policies are no longer identical from one insurer to the next, and what's covered depends on the form and endorsements you actually have.
Why this matters now: if your expectations were set in the HO-B years, don't assume your current policy behaves the way that one did — the old form's broad, replacement-cost instincts live on most closely in today's HO-5 and in a well-endorsed HO-3. And the end of standardization means reading the form is no longer optional: two Texas neighbors can pay the same premium for meaningfully different contracts.
In short: Texas retired its own policy forms a generation ago — the HO-5 is the closest modern relative of the HO-B coverage Texans remember.
The Bottom Line on HO-3 vs HO-5 in Texas
Here's the whole guide in a few sentences. Both forms cover your house on an open-perils basis — the real difference is your belongings. An HO-3 covers contents only against named perils, and often at depreciated actual cash value unless endorsed; an HO-5 covers contents on an open-perils basis, typically at replacement cost, and puts the burden of proof on the insurer to find an exclusion rather than on you to prove a listed peril. In a state where hail and water drive so many claims, those contents rules are where the two forms stop being interchangeable. Expect an HO-5 to cost modestly more for a qualifying home, remember that endorsements can move an HO-3 most of the way there, and know that neither form touches flood — that's always a separate policy.
If you don't know which form you have, that's a five-minute fix. Send us your declarations page or give us a call, and our team will tell you which form you're on, how your contents are valued, and whether an HO-5 or an endorsed HO-3 fits your home — free, no pressure, in plain English. It's a short conversation now that can change what a claim pays later.
Frequently Asked Questions
For many Texas homeowners, yes — if the home qualifies. The HO-5’s advantages show up on contents claims: your belongings are covered on an open-perils basis rather than a named-perils list, and they’re typically valued at replacement cost instead of depreciated actual cash value. In a state where hail and water losses are routine, that difference can change a contents payout meaningfully. As of , the smartest move is a side-by-side review: we look at what your current HO-3 would pay on a realistic claim versus what an HO-5 (or an endorsed HO-3) would pay, so the decision is based on your home and your belongings — not a generic rule of thumb.
No. Neither an HO-3 nor an HO-5 covers flood — rising water from outside the home is excluded from standard homeowners policies across the board, according to the Insurance Information Institute. Flood protection is a separate policy through the National Flood Insurance Program or a private flood insurer. NFIP coverage is capped at $250,000 for the building and $100,000 for contents, and a new policy typically carries a roughly 30-day waiting period, per the III. If your home sits anywhere near Gulf Coast drainage, treat flood as its own decision alongside the HO-3-versus-HO-5 choice — it’s the one gap the policy form debate never fixes.
Usually both, depending on the part of the policy. The dwelling itself is typically insured on a replacement-cost basis under an HO-3, but personal property can be valued either at actual cash value — replacement cost minus depreciation — or at replacement cost, depending on how the policy is written and endorsed, according to the Insurance Information Institute. Many base HO-3 policies default to actual cash value on contents unless replacement-cost coverage is added. As of , that single line is one of the first things we check in a coverage review, because it quietly controls what a Texas hail or water claim actually pays for your belongings.
Often, yes. Two upgrades close most of the gap: a replacement-cost endorsement on personal property, which removes the depreciation haircut, and — where available on your plan — an endorsement that broadens contents coverage from named perils toward open perils. An endorsed HO-3 can behave much like an HO-5 on the claims that matter most, and it’s a common route when a home doesn’t meet HO-5 eligibility rules. Availability and wording vary from plan to plan, so this is exactly the kind of question to put to a licensed agent. We review your current form and tell you plainly whether an endorsement or a form change gets you the better outcome.
They were Texas’s own standardized homeowners policy forms, from the era when insurers in the state sold largely identical policies. The HO-A was a bare named-perils form that generally paid claims at actual cash value, while the HO-B covered more perils and paid most losses on a replacement-cost basis. The Texas Department of Insurance notes that Texas home policies are no longer standardized — insurers now sell their own filed forms, most built on the national HO-3 and HO-5 pattern. If your coverage instincts were formed in the HO-B years, reread your current policy: the form your family had in 2002 is not the form you have now.
Get Your Free Texas Home Insurance Quote
Not sure whether you have an HO-3 or an HO-5 — or how your contents would be valued after a claim? Our team will read your policy, explain your form in plain English, and build the right coverage around your home. Free, no obligation.
✓ Last reviewed by the Granados Insurance Agency team on . We refresh our guides quarterly — Texas policy forms, endorsements, and market figures change.
This guide is general information, not coverage or legal advice. Policy forms, endorsements, eligibility, and pricing depend on your policy and property and can change — always confirm what your own policy covers by reading the form and endorsements or reviewing them with a licensed agent. Figures cited are from the named sources and dates shown; verify current details before you buy.
Written and reviewed by the Granados Insurance Agency team — licensed Texas insurance professionals based at 9639 Scarsdale Blvd, Ste 101, Pearland, TX, serving Pearland, Brazoria County, the Houston Bay Area, Greater Houston, and the Texas Gulf Coast. Figures here are drawn from the named sources cited above — the Texas Department of Insurance, the Insurance Information Institute, and the NAIC — and reviewed quarterly.