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What is an HO-5 insurance policy?

Fact-checked with HomeInsurance.com

When a disaster strikes your home, you need the financial protection that a homeowners insurance policy can provide. Choosing the right amount of coverage is essential in protecting your home’s structure and your valuable belongings. But not all home insurance policies provide equal protection for your home’s structure and contents. HO-5 homeowners policies provide the best protection you can buy. They offer a broader form of protection for everything you hold dear, from the tip of your rooftop to your baby grand piano.

What is HO-5 insurance?

The insurance industry refers to HO-5 policies as “comprehensive form” because it provides the most complete coverage for your home. An insurance policy covers certain types of disasters, called “perils.” For example, the HO-3 policy, the most common homeowners insurance form, provides named-perils protection for your home’s contents, like your clothing and furniture. The 16 named perils covered by an HO-3 policy cover many of the most common types of disasters, such as explosions, fire, theft and vandalism.

However, HO-3 policies offer open-peril coverage for your home’s structure. Open-peril protection pays to rebuild your home, regardless of what caused the damage. But HO-3 policies include a list of exclusions. An exclusion is any type of damage or peril a policy won’t cover. For example, HO-3 policies exclude damages caused by war.

HO-5 policies provide premium coverage for owner-occupied homes. Most HO-5 policies provide open-peril coverage for your home and its contents. That means that your home and personal property are equally protected. However, like an HO-3 policy, HO-5 coverage comes with exclusions. Nonetheless, HO-5 coverage provides the most superior protection.

Who needs HO-5 insurance?

HO-5 policies cost more than other home insurance policy forms. The industry created this home insurance form to meet the needs of homeowners who want maximum protection for their home and personal belongings. Typically, HO-5 policies cover high-value homes, with a market value of $750,000 or more. Many insurers offer higher coverage limits with HO-5 policies, which is ideal for covering high-value homes.

However, an HO-5 policy is a great choice for any homeowner who wants maximum protection. Except for exclusions, this premium policy covers the most perils and provides even greater protection for your valuable personal belongings. Homeowners with few or no past claims and good credit history can often receive an affordable rate for an HO-5 policy.

What does HO-5 insurance cover?

HO-5 policies include the same coverages as most standard homeowners insurance policies, including:

  • Dwelling: HO-5 dwelling coverage protects your home’s main structure, including its exterior and interior walls, foundation and roof.
  • Other structures: This type of coverage protects detached structures on your property, like fences, gazebos, guest houses and swimming pools.
  • Personal property: An HO-5 policy protects the personal content of your home such as clothing, computers, electronics, furniture, jewelry and sports equipment.
  • Loss of use: Following a covered misfortune, loss of use coverage can help pay temporary living expenses, like hotel bills and meals.
  • Medical payments: When someone outside your household sustains an injury on your property, medical payments coverage can help pay the victim’s medical expenses.
  • Personal liability: If someone sues you over an accident that occurs on your property, personal liability coverage can help pay attorney’s fees, court costs, even a settlement or court award.

The open-peril feature of HO-5 policies means your home is covered when any type of disaster strikes unless an excluded peril causes the loss. But HO-5 policies also include the added benefit of extending the open-peril feature to your personal belongings. 

Common perils covered by HO-5 policies include:

Explosions

Natural gas leaks can cause massive damage. Serious gas leaks can lead to a total loss, destroying your home and most of your personal belongings. While other home insurance forms cover damage caused by explosions, HO-5 coverage provides the best protection because it can rebuild your home and fully replace your valuable personal items.

Fire

Fire is one of the most hazardous perils your home faces. Between 2013 and 2017, more than 354,000 homes per year caught fire, causing nearly $7 billion in property damage, according to the National Fire Protection Association. After a fire, an HO-5 policy can pay to rebuild your home and replace property such as kitchen appliances and furniture.

Frozen pipes

Frozen pipes can burst, flooding your kitchen or bathroom.  When the frigid temperatures of winter arrive, homeowners can take a few steps to avoid frozen pipes, like allowing faucets to drip and maintaining an interior temperature of at least 65 degrees Fahrenheit. If frozen pipes damage your home, an HO-5 policy can help replace damaged cabinets and flooring to restore your home to its original state.

Lightning

According to the Insurance Information Institute (III), lightning strikes affected nearly 77,000 U.S. homeowners in 2019, resulting in $920 million in insurance claims. HO-5 policies cover lightning damage and can help restore your home and replace items destroyed by a fire.

Hail

According to III, U.S. insurance companies paid nearly 3 million hail-related claims between 2017 and 2019. Colorado, Illinois, Minnesota, Nebraska and Texas rank among the most vulnerable states for hail damage. Installing an impact-resistant roof and shutters can help reduce hail damage. But if a hailstorm damages your home, your HO-5 policy can repair broken windows and replace damaged property, like outdoor furniture and swimming pool covers.

Theft

According to the U.S. Department of Justice, more than 1.7 million burglaries occurred in 2018. When a burglar strikes, HO-5 home insurance can help pay to replace stolen belongings and repair damage to your home such as broken windows and doors. HO-5 policies also cover the personal property of others, like a houseguest, while in your home.

Limitations on personal property

Insurers allow you to select the amount of personal property coverage you need. But most standard homeowners policies set limits on the amount the insurer will pay for certain types of personal property. Here are a few examples of standard limits:

ItemLimit
Banknotes$1,500
Business property$2,500
Camera and video equipment$1,500
Computers$1,500
Fine art$2,500
Firearms$2,500
Furs$1,500
Jewelry$1,500
Musical instruments$2,500
Silverware$2,500

The above limits represent default values that many insurers set for these types of property. Most major providers allow you to increase some limits. For instance, you may decide to increase the limit on jewelry from $1,500 to $2,500. However, for your most valuable belongings, you may need to add a valuable items rider to your HO-5 policy.

What does HO-5 insurance not cover?

Homeowners coverage doesn’t relieve you of the responsibility of proper home maintenance. If an insurance adjuster determines that a loss resulted from negligence, the carrier might deny your claim. For example, if you allow a water heater to leak for several months, the provider will likely deny a claim to replace rotten flooring.

Likewise, home insurance won’t cover losses resulting from illegal activity. For instance, if you set your house on fire while illegally burning a pile of dead tree limbs, the insurer won’t pay the claim.

HO-5 policies usually won’t cover certain types of personal property, including:

  • Aircraft
  • Automobiles
  • Fraudulent charges to credit or debit cards
  • Land, including the lot on which your house sits
  • Pets
  • Plants, shrubs or trees
  • Property covered by a separate scheduled property policy
  • Property of lodgers

Most HO-5 policies exclude losses caused by certain perils, including:

Earthquakes

Few homeowners policies cover earthquake damage to your home or personal property. However, many insurers offer separate earthquake insurance, which can cover your home’s structure and personal items such as computers, electronics and furniture.

Floods

Standard HO-5 policies don’t cover structural or personal property damage caused by floods. Some major providers offer separate flood insurance policies. You can also purchase a flood policy through FEMA’s National Flood Insurance Program.

Mold

Most homeowners policies exclude mold damage. When left untreated, mold can lead to major damage. In extreme cases, mold can displace a family from their home and lead to very costly mitigation bills. To avoid mold damage, maintain a regular cleaning schedule, removing mold before it has time to spread.

Rodent infestations

Mice, rats and squirrels can damage your home and personal property, from damaged wiring to roof damage. However, HO-5 policies exclude damage caused by birds, insects and rodents. If unwanted creatures invade your home, call an exterminator or animal removal service immediately to prevent costly damage.

Choosing an HO-5 insurance policy

HO-5 policies cost more than HO-3 coverage, but they’re worth the extra cost when a calamity occurs. When searching for an HO-5 policy, look for insurers that pack standard policies with a few extra benefits. For example, some standard HO-5 policies include personal property replacement cost coverage or ordinance of law coverage, which pays to rebuild your home to current building codes.

Also, look for a provider that offers the types of optional coverages or endorsements that fit your individual needs. Folks with high-value homes often need coverages such as identity theft protection or scheduled property insurance to cover expensive items such as artwork or a grand piano. Likewise, choose a carrier that offers high personal liability limits – $1 million or more – and personal property coverage that protects items such as laptops and jewelry when you take them with you on vacation.

If you’re on a budget and can’t quite afford an HO-5 policy, an HO-3 policy is the one to choose. HO-3 policies include the same standard coverages as an HO-5 policy.

The takeaway

  • HO-5 policies provide open-peril protection for both your home and personal property.
  • HO-5 policies are designed for high-value homes and cost more than HO-3 policies.
  • Some insurers include extra benefits in standard HO-5 policies, like personal property replacement cost coverage.

HO-3 policies are the most popular in the home insurance market. They provide open-peril coverage for your home’s structure and cover 16 named perils for your personal belongings. On the other hand, HO-5 policies provide open-peril protection for your home and its contents.

HO-5 policies exclude many of the same perils and types of damages that HO-3 policies do. Both policies exclude damages caused by earthquake and fire and won’t cover your automobile, even if it’s destroyed in the same disaster. However, some HO-5 policies include special benefits that most HO-3 policies only offer as optional coverages, like personal property replacement cost coverage.

Michael Evans

Michael is an insurance writer for Coverage.com. He began writing professionally in the 1990s while working for the world’s first online mortgage broker, and today specializes in education, finance and retiring abroad. Michael has contributed to numerous digital and print publications, including Bankrate, Fox Business, International Living and Yahoo Finance, and is the author of Escape to Colombia, 1st Edition, a comprehensive guide to retiring to Colombia.

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