What Is HO-5 Insurance?

An HO-5 insurance policy is a type of homeowners insurance policy that offers broad coverage for both your home’s structure and your personal belongings. HO-5 coverage is more comprehensive than other types of homeowners insurance, as it typically covers perils unless they are specifically excluded.

The following guide explains how an HO-5 homeowners policy works, including its coverages, exclusions, costs, and more, to help you decide whether it’s appropriate for your needs.

How HO-5 Home Insurance Works

Homeowners insurance policies offer financial protection against a range of potential risks to your home and belongings. They cover a variety of perils (events or circumstances that result in property damage) and liabilities (responsibility for someone else’s injuries or property damage).

An HO-5 policy covers your home and personal property under open perils coverage, meaning that a peril is covered unless it has been specifically excluded. This differs from an HO-3 policy, which provides open perils coverage for your home’s structure but only covers personal property for named perils. In other words, if a peril is not listed in the policy, personal property damage caused by that peril is not covered.

An HO-5 policy typically includes the following:

• Dwelling coverage: Dwelling coverage covers the physical structure of your home, including the walls, roof, and foundation
• Personal property coverage: Personal property coverage protects personal belongings such as furniture, electronics, and clothing
• Liability coverage: Liability coverage covers legal fees and damages if someone is injured on your property or you’re responsible for damage to someone else’s property
• Medical payments coverage: Medical payments coverage helps cover medical expenses if someone is injured on your property
• Other structures coverage: Other structures coverage covers structures on your property that are not attached to the house, such as a shed or detached garage
• Loss of use coverage: Loss of use coverage helps cover the costs of additional living expenses if your home becomes uninhabitable due to a covered peril

Coverages  

An HO-5 policy provides comprehensive coverage for a wide range of perils, including:

• Smoke and fire
• Vandalism and theft
• Windstorms and hail
• Weight of snow, ice, or sleet
• Falling objects
• Accidental overflow or discharge of water or steam
• Sudden and accidental burning, bulging, cracking, or tearing apart of certain household systems such as air conditioning, hot water heating systems, or fire sprinklers

Exclusions  

While HO-5 policies offer broad coverage, they do have some exclusions, such as:

• Earthquakes, landslides, and other earth movements
• Flooding, including sewer backups
• Intentional loss or damage caused by the homeowner
• Normal wear and tear, deterioration, neglect
• Infestations of vermin, birds, or insects
• Mold, wet rot, or fungus (with some exceptions)
• War, nuclear hazard, government action
• Pollution or contamination
• Mechanical breakdown or failure
• Vandalism or malicious mischief that happens to homes that have been vacant for more than 60 days

Types of Home Insurance Policies

There are eight standard types of homeowners insurance policies, ranging from HO-1 to HO-8. Variables include the types of dwellings the policy covers, whether coverage is named or open peril, and the types of coverage it includes.

An HO-3 policy, also known as standard home insurance, is the preferred policy type among homeowners, while HO-5 policies are popular among those seeking greater protection.

Home Insurance Form Categories	Dwelling Type	Named or Open Peril	Dwelling Coverage	Other Structures Coverage	Personal Property Coverage	Liability Coverage	Medical Payments Coverage
HO-1, or 10 Named Perils Insurance	Single-family home	Named	Yes	Varies	No	Varies	Varies	Varies
HO-2, or 16 Named Perils Insurance	Single-family home	Named	Yes	Varies	Yes	Varies	Varies	Varies
HO-3, or Standard Home Insurance	Single-family home	Dwelling limit is open, personal property is named	Yes	Yes	Yes	Yes	Yes	Yes
HO-4, or Renter’s Insurance	Rental property	Named	No	No	Yes	Yes	Yes	Yes
HO-5, or Open Perils Insurance	Single-family home	Open	Yes	Yes	Yes	Yes	Yes	Yes
HO-6, or Condo Insurance	Condo, co-op, or townhome*	Named	Some	No	Yes	Yes	Yes	Yes
HO-7, or Mobile Home Insurance	Mobile home	Open	Yes	Varies	Yes	Yes	Varies	Yes
HO-8, or Modified Coverage Home Insurance	Varies**	Named	Yes	Yes	Yes	Yes	Varies	Varies

How Much Does HO-5 Insurance Cost? 

While the cost of insurance policies varies widely, in general, homeowners can expect to pay between $630 and $2,860 per year for an HO-5 policy. The average cost of HO-5 policies for homes in the U.S. is $1,471.

The cost of HO-5 insurance varies based on several factors, including the home’s value and size, location, condition, and age. Generally, the more valuable and larger your home is, the higher the coverage limits you’ll need, leading to higher premiums. Homes in locations prone to natural disasters, high crime rates, or with higher rebuilding costs typically incur higher insurance costs. Older homes can also be more expensive to insure due to the higher risk of claims.

A homeowners insurance policy with a higher deductible can lower your premium, but it’s important to keep in mind that choosing this option can result in higher out-of-pocket expenses if you need to make a claim. Your credit score and history of making homeowners insurance claims can impact your rate. A higher credit score may lower your premium cost, while past claims could result in higher rates. Finally, adding endorsements for specific risks like floods or earthquakes increases the policy’s cost.

Should You Consider an HO-5 Homeowners Policy?  

Determining whether an HO-5 policy is right for you typically comes down to weighing the extent of coverage against associated costs and limitations. Here’s a look at some of the important pros and cons to consider.

Pros  

• Broader coverage: HO-5 policies offer open perils coverage for both the dwelling and personal property, protecting against a wider range of scenarios.
• Protection for high-value items: HO-5 policies typically offer higher coverage limits for personal property, making it appealing to those who want to protect high-value items.
• Simplified claims process: With open perils coverage, the burden of proof is on the insurer to prove an exclusion rather than on the homeowner to prove a named peril. This can reduce stress when a claim arises.
• Quicker claims resolution: Due to the open perils nature of HO-5 policies, fewer disputes over coverage may lead to quicker claims processing and resolution.

Cons  

• Higher premiums: HO-5 policies are generally more expensive than HO-3 policies and other types of homeowners insurance due to the broader coverage they provide.
• Policy exclusions: Despite extensive coverage, certain perils like floods and earthquakes are typically excluded from HO-5 policies.
• Limited availability: Not all insurers offer HO-5 policies. They also might not be available for older or higher-risk homes.
• Potential over-insurance: For homeowners with fewer high-value items or less need for extensive coverage, an HO-5 policy could result in paying for more insurance than is necessary.

What This Means for You  

When comparing homeowners insurance policies, it’s important to understand whether the policy offers open perils or named peril coverage, as well as the policy limitations and costs. If you’re looking for comprehensive coverage for your home’s structures and personal property and do not mind paying a higher premium, an HO-5 policy may be appropriate. Consulting with a qualified insurance professional can help you determine what type of homeowners insurance policy will meet your needs.

Frequently Asked Questions