Homeowners insurance coverage is a bundle of protections in one policy. It pays to repair or rebuild your house, replace your belongings, cover extra living costs if you must move out, and defend you if someone sues over an injury or damage you caused. What it pays for depends on your policy form, your limits and your deductible.
Most US homeowners policies use a set of standard forms, named HO-1 through HO-8. The form tells you which events, called perils, are covered and how. This guide walks through the forms, the six standard coverages, how claims are valued, and the gaps you should know about before you buy or renew.
We are an independent publication, not an insurer or agent. Policy wording varies by company and state, so always read your own policy and ask your agent or your state insurance department if something is unclear.
What are the main homeowners policy forms?
The form is the template your policy is built on. HO-3 is the most widely used form for owner-occupied houses, while HO-5, HO-6 and HO-8 serve more specific needs.
The NAIC, the group of state insurance regulators, describes the forms this way in its 2026 homeowners data-call definitions (NAIC, 2026):
| Form | Common name | Who it is for | How perils work |
|---|---|---|---|
| HO-2 | Broad form | Owners who want a lower-cost, narrower policy | Named perils only |
| HO-3 | Special form | Most owner-occupied houses | Open perils on the house; usually named perils on belongings |
| HO-4 | Renters form | Tenants | Named perils on belongings |
| HO-5 | Comprehensive form | Owners who want the broadest standard coverage | Open perils on both house and belongings |
| HO-6 | Condo owner’s form | Condo unit and co-op owners | Covers your unit interest and belongings |
| HO-7 | Mobile/manufactured home form | Mobile and manufactured homes | Open perils on structure; named perils on belongings |
| HO-8 | Modified coverage form | Older or high-risk homes | Limited coverage |
HO-3 vs HO-5
The key difference is your belongings. With an HO-3, a loss to your stuff is paid only if it was caused by a peril listed in the policy. With an HO-5, your belongings get open-perils coverage too, so the insurer must point to an exclusion to deny a claim. HO-5 usually costs more, and not every insurer sells it.
HO-6 for condos
An HO-6 covers your belongings, your liability and the parts of the unit that you own. The building itself is usually insured by the condo association’s master policy. Where the line falls between “theirs” and “yours” depends on the master policy and the association’s bylaws, so read both before you choose a limit.
HO-8 for older homes
An HO-8 is built for homes where rebuilding with the original materials would cost far more than the home is worth, such as some older homes with custom woodwork. It offers more limited coverage than an HO-3, often paying to repair with standard modern materials rather than to restore the original look.
What do Coverages A through F pay for?
A standard homeowners policy has six parts, each with its own limit. The first four protect your property, and the last two protect you from claims by other people.
| Coverage | Name | What it pays for |
|---|---|---|
| A | Dwelling | Your house and attached structures, like an attached garage |
| B | Other structures | Detached structures, like a fence, shed or detached garage |
| C | Personal property | Your belongings, like furniture, clothes and electronics |
| D | Loss of use | Extra living costs, such as a hotel, if a covered loss makes your home unlivable |
| E | Personal liability | Injury or property damage you are legally responsible for, plus legal defense |
| F | Medical payments | Small medical bills for guests hurt on your property, regardless of fault |
Coverage A: dwelling
Your dwelling limit should be high enough to rebuild your home, not to buy it. Rebuilding cost is different from market value because it does not include the land and depends on local labor and material prices. The NAIC notes that dwelling coverage should be enough to fully rebuild your home (NAIC, updated October 25, 2025).
Coverages B, C and D
Other structures, personal property and loss of use limits are often set as a share of Coverage A. As of our October 2026 review, the Insurance Information Institute (III) says personal property coverage is often about 50% to 70% of the dwelling limit and additional living expense coverage is often about 20%, though limits vary by insurer. You can usually raise or lower these.
Coverages E and F
Liability coverage pays if you are legally responsible for someone else’s injury or property damage, such as a guest falling on icy steps. As of our October 2026 review, III says most policies include at least $100,000 of liability coverage and suggests considering $300,000 to $500,000. Medical payments coverage is much smaller and pays a guest’s minor medical bills without anyone needing to prove fault.
Replacement cost vs actual cash value: what is the difference?
Replacement cost pays what it costs to repair or replace something at today’s prices. Actual cash value (ACV) pays replacement cost minus depreciation, which is the loss in value from age and wear.
The Texas Department of Insurance explains that ACV policies subtract depreciation for wear and age, which usually leaves you paying more out of pocket (Texas Department of Insurance, last updated June 1, 2026).
Some policies mix the two. The NAIC’s 2026 data definitions note that a policy can have replacement cost on the house but apply ACV to a roof damaged by wind or hail (NAIC, 2026). Check your declarations page and any roof schedule.
Extended and guaranteed replacement cost
Building costs can jump after a big disaster. Extended replacement cost adds a cushion above your dwelling limit. As of our October 2026 review, III describes this cushion as typically 5% to 25% above the limit. Guaranteed replacement cost, where offered, pays the full rebuild cost even above the limit. Ordinance or law coverage helps pay to bring a rebuilt home up to current building codes.
What is not covered by homeowners insurance?
Every policy has exclusions, which are causes of loss or items it will not pay for. Knowing them helps you decide whether you need extra coverage.
Common exclusions include:
- Flood, including storm surge and overflowing rivers.
- Earthquake and other earth movement.
- Wear and tear, rot, mold from long-term leaks, and poor maintenance.
- Pests, such as termites and rodents.
- Sewer or drain backup, unless you add an endorsement.
- Intentional damage and certain business activities run from home.
The Texas Department of Insurance lists flooding, termites, wear and tear and earthquakes among the damages most policies do not cover (Texas Department of Insurance, last updated June 1, 2026). Learn how to fill the two biggest gaps in our guide to flood and earthquake insurance.
How do percentage deductibles for wind and hurricanes work?
A deductible is the part of a covered loss you pay before the insurer pays. Most homeowners deductibles are a fixed dollar amount, but wind, hail and hurricane deductibles are often a percentage of your Coverage A dwelling limit.
As of our October 2026 review, III reports that 19 states and the District of Columbia have hurricane deductibles and that percentage deductibles typically range from 1% to 5% of a home’s insured value. What triggers a hurricane deductible, such as the National Weather Service naming a storm or issuing a hurricane watch or warning, varies by state and insurer (III).
The NAIC notes that a lower deductible generally means a higher premium (NAIC, updated October 25, 2025). Pick a deductible you could pay from savings in a bad year. For more ways to lower your premium without cutting coverage, see our car and home insurance discounts guide.
What is a FAIR plan, and when should you use one?
A FAIR plan (Fair Access to Insurance Requirements) is a state-created program that sells basic property insurance to people who cannot get it from a regular insurer. It is a last resort, not a first choice, because coverage is often narrower.
Rules differ by state:
- California: The California Department of Insurance describes the California FAIR Plan as a private association run by insurance companies, created by state law for people who cannot get insurance through a regular company. It currently describes the residential policy as a limited fire policy, which many people pair with a separate “difference in conditions” policy to fill gaps (California Department of Insurance, accessed October 2026).
- Texas: The Texas Department of Insurance says the Texas FAIR Plan Association sells basic home insurance to people who cannot find a Texas-licensed insurer after at least two have turned them down, and the Texas Windstorm Insurance Association sells wind and hail coverage to coastal residents (Texas Department of Insurance, last updated June 1, 2026).
- Ask several insurers and an independent agent for quotes first.
- If you are turned down, ask why. Fixing a roof or other issue may open more options.
- If you still cannot find coverage, ask a licensed agent about your state’s FAIR plan, or check your state insurance department’s website.
- Compare what the FAIR plan covers with what you need, and look for ways to fill gaps, such as liability.
How much homeowners coverage do you need?
You need enough to rebuild your home, replace your belongings and protect your savings from a lawsuit. The right limits come from your own numbers, not a rule of thumb.
Steps to set your limits:
- Dwelling: Ask your insurer or a local builder for a rebuilding cost estimate. Update it after renovations.
- Belongings: Add up your inventory (see below) rather than guessing.
- Loss of use: Think about local rent and how long a rebuild could take.
- Liability: Match your limit to what you could lose in a lawsuit, and consider an umbrella policy.
When you shop, ask every insurer for the same form, limits and deductibles so the quotes are comparable. Our guide on how to compare insurance quotes has a checklist.
How do you make a home inventory?
A home inventory is a list, with photos or video, of what you own. It helps you choose a personal property limit and makes claims faster.
- Go room by room. Open closets and drawers. Record video while describing items.
- Note details. Write down brand, model, serial number and rough purchase date and price.
- Save receipts and appraisals for valuable items.
- Include the garage, attic and shed. These count too.
- Store it off-site. Keep a copy in cloud storage or with someone you trust.
- Update it yearly and after big purchases.
The NAIC offers a free home inventory app to help you record your belongings, and III has a step-by-step home inventory guide (both accessed October 2026).
What should you check when you renew?
Your renewal is a good time to review your coverage, because costs and your home both change over time.
- Has your rebuilding cost gone up? Ask whether your dwelling limit keeps pace.
- Did your deductible or wind deductible change?
- Did the insurer switch your roof or belongings to actual cash value?
- Did you renovate, buy valuables or start a home business?
- Do you need flood, earthquake or sewer backup coverage added?
If you have questions about your rights, a nonrenewal or a claim dispute, contact your state insurance department. Its consumer help line is free.
