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What Is An HO-5 Insurance Policy?

What Is An HO-5 Insurance Policy?
Holly Johnson
Updated January 6, 2022
3 Min Read

If you're in the market for homeowners insurance, you should take the time to learn about all the different coverage options and how they work. In the meantime, you'll need to decide about the limits you want for your policy, and whether you need access to premium, upgraded coverage for high-value items you own.

An HO5 insurance policy, sometimes called the comprehensive form, is the crème de la crème when it comes to homeowners insurance coverage, mostly because of the way this type of policy pays out claims, the higher limits you can qualify for and the extra perks you get. If you are hoping to purchase the best homeowners insurance coverage money can buy, read on to learn about HO5 insurance policies, how they work and who they're best for.

What Is An HO5 Homeowners Insurance Policy? 

An HO5 homeowners insurance policy is a type of traditional homeowners insurance that comes with better coverages and higher limits. Generally speaking, the factors that help HO5 policies stand out include:

  • Replacement Cost Coverage: With an HO5 insurance policy, losses are reimbursed at replacement cost. This means you'll get the actual value of the item as it stands today instead of the cash value or a depreciated amount.
  • Higher Coverage Limits: A HO5 insurance policy typically comes with more robust coverage and higher limits for valuable items, which can include jewelry, artwork, electronics and more.
  • Open Perils Coverage: Having your home insured with open perils coverage means you'll have protection for all items and circumstances that aren't specifically excluded from your policy.
  • Extra Coverages Included: Some HO5 homeowners insurance policies also come with additional coverage options you would normally have to add to your policy, such as equipment breakdown and service line coverage.

What Does An HO5 Policy Cover?

An HO5 homeowners insurance policy works similarly to traditional homeowners insurance, albeit with higher coverage limits and more types of coverage included as we already mentioned. With that in mind, an HO5 policy will cover damages to your home and personal property when it’s caused by a covered event or peril. And since HO5 policies come with open perils coverage, all damages are covered unless they are specifically listed as exclusions in your policy.

For example, an HO5 insurance plan includes coverage for your personal property and your dwelling, which can kick in if your property is damaged by fire, vandalism, lightning strikes, windstorms, hail and more. 

HO5 Homeowners Insurance Exclusions

While HO5 homeowners insurance policies are so broad they are commonly referred to as comprehensive form homeowners insurance, there are plenty of events that are excluded from these policies altogether.

Potential exclusions to watch out for when you shop for this coverage include:

  • Collapse
  • Damages caused by animals you own
  • Earth movement
  • Ordinance or law
  • Intentional losses and acts
  • Government acts
  • Infestation
  • Mechanical breakdown
  • Neglect 
  • Nuclear hazard
  • Mold, wet rot and fungus
  • Power failure
  • Rust, smog and corrosion
  • Settling, shrinking bulging or other movements of a home's foundation
  • Theft within a dwelling that is being constructed
  • Vandalism when homes are vacant for 60 or more days
  • War
  • Water damage from a flood, a sewer backup or water seepage
  • Wear and tear

These are just some of the exclusions you may find in a HO5 insurance policy. With that in mind, you'll want to read over the fine print in your own policy to check for these and others.

Differences Between HO3 And HO5 Homeowners Policies

Where an HO5 homeowners insurance policy is considered the best of the best, HO3 homeowners policies are a step down. This doesn't mean that a HO3 policy will leave you inadequately insured. In fact, HO3 homeowners insurance policies can still have high enough limits to provide you with the dwelling coverage and personal property coverage you need. You can also add on additional coverage options with an HO3 policy for even more robust protection.

It's worth noting that these two types of policies are typically geared to homeowners with properties in a different price range. Where a HO3 homeowners insurance policy is for homes that cost anywhere from $200,000 to $1 million dollars, HO5 insurance policies are for homes that range in value from $350,000 to $2 million and up.

There are some other differences between HO5 and HO3 homeowners insurance policies, which are highlighted in the chart below:

HO5 Homeowners InsuranceHO3 Homeowners Insurance
Type of dwelling coverageOpen perilsNamed perils
Type of personal property coverageOpen perilsNamed perils
Claims processGet reimbursed for all damages that are not explicitly excluded from your policyRequires proof that your property was damaged by a covered peril
How you're reimbursed after a claimReplacement costActual cash value
Best forHomeowners with high-value items and homes that cost up to $2 million or moreAvailable to all home types

Who Are HO5 Policies Best For?

According to homeowners insurance companies, HO5 policies are typically available for homeowners who have newer homes that cost more than average. These policies are also geared to homes that are at a low risk for natural disasters, crime and other perils that could unnecessarily result in loss or damages.

If you have high value items in your home and you live in a safe area, an HO5 homeowners insurance policy may be exactly what you need. However, you should take the time to compare different types of coverage with different issuers, including both HO3 and HO5 policies, to find the best deal. 

HO5 homeowners insurance policies don't always cost significantly more than traditional coverage, but you won't know unless you check.

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