HO-5 homeowners insurance policies provide some of the most comprehensive coverage you can buy. These policies provide even more coverage than the most popular form of home insurance, HO-3 policies. As such, HO-5 insurance might not be as affordable for some people, and therefore not the right choice.
A local independent insurance agent can help you determine if HO5 home insurance makes the most sense for you and your property. They'll help you compare different forms of home insurance to find the best policy. But first, here's a breakdown of HO5 home insurance, what it covers, and why you might choose it.
What Is an HO5 Policy?
HO-5 home insurance, also written as HO5 insurance, covers your home's structure, your personal belongings, liability, loss of use, and more, the same as HO-3 insurance does. However, HO5 insurance coverage provides more protection for your personal belongings than an HO3 policy. If you want increased coverage for your personal belongings, also called contents, you may choose an HO5 policy.
Open-Perils vs. Named Perils Coverage
"Open-perils" coverage means that your home insurance will provide reimbursement for any disaster that damages or destroys your insured property except for those listed specifically as exclusions. "Named perils" coverage means that a policy will only cover the specific disasters listed on your policy. HO5 policies include open-perils coverage for your home's dwelling, additional structures, and your personal belongings.
What's the Difference Between HO-5 and HO-3 Insurance?
When selecting HO5 vs. HO3 insurance, it can be helpful to first compare the similarities and differences in these policies. While both types of coverage offer the same categories of protection, HO5 insurance provides coverage for your personal belongings on an open-perils basis, whereas HO3 policies only provide named perils coverage for contents.
HO5 vs. HO3 insurance
| Coverage Category | HO-5 Policies Cover: | HO-3 Policies Cover: |
|---|---|---|
| Dwelling coverage | Open perils | Open perils |
| Contents coverage | Open perils | Named perils only |
| Other structures coverage | Open perils | Open perils |
While HO3 coverage restricts your personal belongings' protection to only named perils, HO5 policies will cover your items from any disaster except for those specifically excluded. An independent insurance agent can help you review your coverage to determine what's excluded.
What Does HO-5 Insurance Cover?
HO5 home insurance provides the same coverage categories as HO3 insurance. These include:
- Dwelling coverage: This coverage protects your home's structure, including the walls, roof, foundation, etc., on an open-perils basis.
- Contents coverage: This coverage can reimburse you for the cost of repairs or replacements to your personal property, such as clothing and furniture, on an open-perils basis.
- Liability coverage: This coverage can reimburse you for expenses stemming from third-party claims of bodily injury or personal property damage, including lawsuit costs if you are sued.
- Additional living expenses coverage: This coverage can pay for loss of use of your home or times when you must temporarily live somewhere else while your property is undergoing covered repairs. It can also pay for various costs, such as hotel rooms, additional gas mileage, takeout meals, and more.
- Other structures coverage: This coverage protects additional structures you've insured, such as fences, barns, garages, and sheds, on an open-perils basis.
Whether you choose an HO5 or an HO3, you'll still get critical protection for all the major categories of your home.
What's Not Covered by HO5 Insurance?
HO-5 policies specifically list their coverage exclusions. HO5 insurance typically won't cover any of the following:
- Earth movement and earthquake damage
- War
- Nuclear hazard
- Government action
- Power failure
- Water damage from seepage, flood, and sewer backup
- Mold, wet rot, and fungus
- Collapse
- Intentional loss
- Theft at a dwelling under construction
- Neglect, deterioration, and wear and tear
- Mechanical breakdown
- Vandalism and malicious mischief if property is vacant for over 60 days
- Smog, corrosion, and rust
- Smoke from agricultural smudging and industrial operations
- Pet damage
- Infestation of insects, birds, rodents, and vermin
- Bulging, expanding, shrinking, and settling of your home’s foundation
- Seepage, dispersal, and discharge of pollutants
Unless your home or personal property is damaged by one of these listed perils, your claim is likely to be approved by your carrier.
How Much Does an HO-5 Policy Cost?
HO5 insurance is typically more expensive than HO3 insurance because it provides more comprehensive coverage for your dwelling and personal property. The current national average cost of HO-3 home insurance is $2,270 annually for a policy with $300,000 in dwelling coverage.
You can expect an HO5 policy to be a bit more expensive. However, the cost of coverage can depend on many different factors, including:
- Your location
- Your claims history
- The value of your property
- The age of your home
- How much coverage you need
An independent insurance agent can help you find affordable HO-5 insurance near you. They can also help you apply any home insurance discounts you qualify for to help reduce your premiums.
An Independent Insurance Agent Can Help You Find the Right HO-5 Policy and Other Types of Home Insurance
The best way to figure out if the HO5 home insurance policy is right for you is to work with a local independent insurance agent. These agents have access to multiple insurance companies, so they're free to shop and compare several policies and rates for you.
They'll present you with only the best quotes for HO-5 insurance and other types of homeowners coverage. And down the road, your agent can help you file home insurance claims and update your policy as necessary.
Sources
https://www.bankrate.com/insurance/homeowners-insurance/ho5/
