Texas home insurance quotes sometimes carry a three-character code that most buyers never ask about: HO-A, HO-B, or HO-3. The letters look interchangeable. They are not. They describe two different answers to the two questions that decide every claim: which causes of loss the policy covers, and whether it pays today’s rebuilding cost or a depreciated number. The premium spread between the cheapest form and the right one is often a few hundred dollars a year. The payout spread on a single bad claim can be tens of thousands.
Where the three forms come from
Texas is one of the few states that historically wrote its own homeowners policy forms. According to the Texas Department of Insurance’s report on Texas homeowners policies, companies must write Texas homeowners insurance on forms approved by TDI, and before 2003 they had to use either Texas promulgated forms, the HO-A, HO-A+, and HO-B, or national forms developed by the Insurance Services Office, the advisory organization behind the HO-1 through HO-5 series used across the country.
That changed with Senate Bill 14 in 2003. TDI’s report states that insurers began filing and using their own forms in 2003 under SB 14, although some still use the promulgated forms. So the honest description of today’s market is a hybrid: the Texas forms still exist and a minority of policies still use them, but most of what is quoted today is a company-filed form built on the HO-3 skeleton, each with its own tweaks. Independent Texas agencies such as The Agent’s Office and Texan Insurance report that carriers moved away from the HO-B in the early 2000s, during the wave of water and mold litigation, and that HO-3-style forms with endorsements now dominate.
That history matters when you shop, because a quote comparison that ignores the form is comparing prices on different products. Our guide on how to compare home insurance quotes covers the mechanics; this article covers the forms themselves.
The three forms side by side
TDI’s homeowners policies report maps each Texas form to its ISO cousin and describes the coverage each provides. The table below combines that mapping with the settlement and water-damage differences reported by TDI and Texas agencies.
| HO-A | HO-B | HO-3 | |
|---|---|---|---|
| Origin | Texas promulgated form (TDI) | Texas promulgated form (TDI) | National ISO-style form, company-filed |
| ISO equivalent per TDI | HO-1 | HO-3 | — |
| Dwelling coverage | Named perils only | All risk (open perils) | Open perils |
| Contents coverage | Named perils | Named perils | Named perils |
| Typical loss settlement | Actual cash value | Replacement cost | Replacement cost on dwelling; contents often ACV unless endorsed |
| Water damage | Basic sudden events only, if listed | Broadest, including many slow plumbing leaks | Sudden and accidental only; continuous seepage excluded |
| Who sells it today | Budget and nonstandard market | Rarely written new | The default structure for most Texas carriers |
Named perils vs open perils is the first fork
TDI’s consumer guidance draws the line plainly. Named-peril policies “cover only the events listed in the policy.” All-risk policies, which TDI notes are also called open perils policies, “cover any event that the policy doesn’t specifically exclude.”
The HO-A sits on the named-perils side for both the building and its contents. TDI’s form comparison lists its typical perils as fire, lightning, smoke, windstorm, hurricane, hail, explosion, aircraft and vehicles, vandalism, riot, and theft. Anything that does not fit one of those labels is simply not a claim. The HO-A+ adds broad-form perils such as falling objects, weight of ice, freezing pipes, and some sudden water discharge.
The HO-B and the HO-3 flip the logic for the dwelling: all perils are covered unless the policy excludes them. Per TDI, both forms still cover contents on a named-perils basis. The structure has a practical consequence that follows directly from the definitions. Under a named-perils form, the claim begins with showing that a listed peril caused the loss. Under an open-perils form, the starting assumption runs the other way, and the discussion is about whether an exclusion applies.
TDI also notes that if you owe money on your house, your lender will probably require an all-risk policy, which by itself pushes most mortgaged homeowners out of the HO-A.
ACV vs replacement cost is the second fork
The second question is what the policy pays once a loss is covered. TDI’s definitions: replacement cost “pays to replace or repair your property, based on current costs, without deduction for depreciation,” while actual cash value “pays to repair or replace your property minus depreciation.”
The Insurance Information Institute illustrates the gap with a ten-year-old television: a replacement cost policy pays for a comparable new set, while an actual cash value policy pays only a small percentage of the new price. III puts the premium difference at roughly 10 percent more for replacement cost coverage.
HO-A policies are the ACV form. Texas agency guides consistently describe the HO-A as settling at actual cash value, which is a large part of why it is cheap. Run the arithmetic on a roof and the discount stops looking like one. If a hailstorm forces a $30,000 roof replacement and the roof is halfway through its service life, a straight ACV settlement starts near $15,000, before the deductible comes out. On an HO-B or HO-3 with replacement cost, the starting number is the $30,000 it costs to put the roof back. Same storm, same house, roughly a $15,000 spread from the form alone, and larger losses scale the gap. Note that many modern HO-3 variants now claw some of this back with roof schedules and percentage deductibles, which we cover in our guide to wind and hail deductibles in Texas.
What each form excludes, and why water killed the HO-B
No form covers everything. TDI’s report lists the exclusions common even to comprehensive all-risk policies: flood, earthquakes, termites and other pests, wear and tear, mold beyond what a covered water loss requires, and water damage from continuous and repeated leakage or seepage.
Water is where the three forms diverge most, and it is the reason the market looks the way it does. The old HO-B was famous for broad water coverage, including damage from plumbing leaks that other forms treat as maintenance. Texas agencies such as Texan Insurance and The Agent’s Office trace the industry’s retreat from the HO-B to the water and mold claim disputes of 2001 to 2003, after which carriers shifted to ISO-style forms with tighter water language.
TDI’s report shows what that tightening looks like in practice. In its comparison of limited water coverage, companies using the Texas HO-A Plus form cover sudden discharge of water but exclude seepage lasting 14 or more days, while companies using ISO policy forms exclude seepage over weeks, months, or years, and several large Texas carriers exclude any leak that persists long enough to cause deterioration. In other words, the slow leak behind a shower wall, the classic Texas slab-and-plumbing claim, is covered generously under a true HO-B, narrowly under some filed forms, and not at all under others.
Where each form still makes sense
The HO-A survives for a reason. Some homes cannot qualify for an open-perils replacement-cost policy at a price the owner will pay, and a named-perils ACV form is what the standard market will offer on an older home, a home with prior claims, or a roof past its service life. For those owners the HO-A question is not whether it is the best form, it is whether the specific perils listed match the risks that worry them, and what the depreciated payout would actually be on their roof and plumbing.
TDI’s report also notes that some companies let you buy back full or limited coverage for excluded perils, including continuous seepage of water, mold remediation, and vacant property. That is worth knowing in both directions: a bare HO-A can sometimes be patched upward with endorsements, and a strong-looking HO-3 variant can arrive with those same coverages already stripped out. The endorsement schedule on the declarations page is where either move shows up.
What you are actually buying today
Because SB 14 made Texas a file-and-use state for forms, the letters are now a starting point rather than a guarantee. Two carriers can both sell an HO-3-style policy and treat a 15-day plumbing leak, a 12-year-old roof, or mold remediation in three different ways through endorsements. The form question has become a provisions question.
Two free tools make that checkable. The Office of Public Insurance Counsel’s Policy Comparison Tool linked the actual filed policy forms of insurers covering over 80 percent of the Texas homeowners market, and OPIC built it to compare how companies handle plumbing leaks, mold, and foundation damage, but OPIC has taken the tool down for a redesign with no announced timeframe and now points consumers to the TDI-approved forms filed in SERFF instead (Source). TDI’s HelpInsure site compares sample rates alongside coverages. Pull your declarations page, find the form name, and read the water and roof provisions before you renew. What those provisions cost in premium across the state is covered in our guide to what homeowners insurance costs in Texas.
The cheapest form on the quote sheet is cheap because it answers both claim questions in the insurer’s favor: fewer covered causes, depreciated payouts. Whether that trade is worth a few hundred dollars a year is a decision to make before the storm, with the form in hand, not after.