An HO-5 policy is the most comprehensive form of homeowners insurance on the market, offering broad protection for both your home’s structure and personal belongings.
An HO-5 policy , also known as a comprehensive form policy , is a superior type of homeowners insurance, offering more protection for both your home and personal property than any residential policy on the market.
What sets an HO-5 policy apart from standard homeowners insurance is the level of protection for personal belongings like furniture, clothes, and appliances.
In a standard HO-3 policy, your personal belongings are covered against named perils , which refer to the 16 perils specifically listed in your policy. When you file a claim that involves your belongings, the burden of proof is on you to prove the damage or loss you’re claiming was caused by one of those perils.
In an HO-5 policy, your personal property is covered on an “all-risks” basis. Also known as open perils , this means you’re covered against everything except the perils exempt from the policy, such as earthquakes, flooding, and intentional acts. When you file an HO-5 claim involving your belongings, you don’t need to prove if the loss is covered or not — the burden of proof is on your insurance company.
An HO-5 policy is a type of homeowners insurance that features more robust personal property coverage than a standard policy
With an HO-5, your belongings are covered against everything except the perils specifically mentioned in the policy
Your belongings are also covered at their replacement cost, meaning you’ll be reimbursed the value of new items after a loss
An HO-5 policy is the most comprehensive form of coverage on the residential market, providing open perils coverage and replacement cost claim settlements for your home and personal property. Around 14% of single-family homes are insured by HO-5 insurance, making it the second most popular form of residential coverage in the U.S. behind the HO-3 policy, which insures 79% of homes.
HO-5 insurance contains all the same coverages as its HO-2 and HO-3 cousins, protecting the structure of the home, detached structures, belongings, additional living expenses, personal liability, and guest medical payments. The biggest difference between the HO-5 and the other policy forms is the scope and quality of personal property coverage.
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Here’s a look at the different coverages in an HO-5 policy:
|Coverage||What does this coverage do?||Loss valuation|
|Section I - Property Coverages|
|Coverage A - Dwelling||Covers the structure of your home and built-in appliances||Replacement cost|
|Coverage B - Other Structures||Covers detached structures on your property||Replacement cost|
|Coverage C - Personal Property||Covers your personal belongings both inside and outside the home||Replacement cost|
|Coverage D - Loss-of-use||Pays for additional living expenses while your home is being repaired|
|Additional Coverages||Explains all the additional coverages in a standard policy—like debris removal, loss assessment and ordinance or law—and the insured limits of each|
|Section II - Liability Coverages|
|Coverage E - Personal Liability||Pays for legal and medical bills if you're held liable for injury or personal property damage to someone else|
|Coverage F - Medical Payment To Others||If a guest is injured in your home, it pays for their medical bills, regardless of who is at fault|
An HO-5 covers the structure of your home, any other structures on the property, and your personal belongings against everything except the specific perils listed in the policy. That means if rain entered your home through an opening in the roof and damaged your furniture, you could file a claim without having to prove that the loss is covered. Conversely, if you were to file an HO-3 claim for the same loss, the onus would be on you to reference one of the 16 named perils as a covered loss. If you’re not able to do that, you may not be covered.
Here are some common perils covered by an HO-5 policy:
Fire or lightning
Windstorm or hail
Riot or civil commotion
Weight of ice, snow, or sleet
Accidental discharge or overflow of water or stream
Sudden and accidental tearing apart, cracking, burning, or bulging of a built-in appliance like a water heater or centralized air conditioner or heating system
Sudden and accidental damage from an artificially generated electrical current
Although an HO-5 policy offers more protection than standard homeowners insurance, there are still a number of exclusions to be aware of. Here’s a look at what your HO-5 policy will not cover:
Ordinance or law
Water damage from flooding, sewer backups, or water that seeps up from the ground
Theft to a dwelling under construction
Vandalism or malicious mischief (if vacant more than 60 days)
Mold, fungus, or wet rot (except if it resulted from an accidental discharge or overflow of water)
Wear and tear
Smog, rust or other corrosion
Smoke from agricultural smudging and industrial operations
Discharge, dispersal, seepage of pollutants
Settling, shrinking, bulging, or expanding of parts of the structure like your foundation or walls
Birds, vermin, rodents, insects
Animals owned by insured
|Policy type||Dwelling coverage||Personal property coverage||Dwelling claim reimbursements||Personal property claim reimbursements|
|HO-3||Open perils||Name perils||Replacement cost||Actual cash value|
|HO-5||Open perils||Open perils||Replacement cost||Replacement cost|
At the end of the day, you can’t go wrong with an HO-3 or HO-5 — both are light-years ahead of the basic form policies (dwelling fire, HO-1, and HO-2) in terms of coverage quality and availability. But if it’s between the two and you happen to own a lot of stuff, an HO-5 policy is your best bet for providing maximum protection for your personal belongings.
The two policy types also don’t differ in cost as much as you’d think. As of 2017, the average annual premium for an HO-3 was $1,211, while HO-5s averaged out to $1,292, according to the National Association of Insurance Commissioners (NAIC). Where you notice the biggest price discrepancy between the two insurance types is with high value homes, as homes with an insurable value of $500,000 or more had a $2,149 HO-3 premium, and a $2,839 HO-5 premium, on average.
One thing to keep in mind is that HO-5 insurance is usually intended for newer homes in areas at low risk of weather damage or other types of loss. Insurance companies generally avoid writing HO-5s in high-risk areas, as the broader personal property protection offered by these policies often means higher claim payouts. That, coupled with claim frequency, limits the availability of HO-5s in regions with considerable risk exposure.
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