What is HO-5 Homeowners Insurance and Do you Need it?


Learn the key benefits of HO-5 insurance, exclusions to be aware of, and factors that affect its cost. We'll also explore ways to customize the policy to fit your circumstances. Let's help you determine whether HO-5 home insurance is the right choice for you!


As a homeowner, you may have valuable personal belongings or an expensive property that you want to protect. That’s why it’s important to choose the right insurance policy that suits your needs. HO-5 homeowners insurance offers broader coverage than traditional HO-3 policies and can provide financial security in case of unforeseen events. In this blog post, we’ll discuss the key benefits of HO-5 insurance, exclusions to be aware of, and factors that affect its cost. We’ll also explore ways to customize the policy to fit your circumstances. Let’s help you determine whether HO-5 home insurance is the right choice for you!

Short Summary

  • HO-5 Homeowners Insurance provides broader coverage than HO-3 policies.
  • It is well suited for homeowners with high-value homes or valuable contents, offering more comprehensive protection.
  • Personal property is covered on an open-perils basis compared to named perils under an HO-3 policy.
  • Contents are reimbursed based on the replacement value, rather than actual cash value.
  • While typically more expensive, the cost of an HO-5 policy depends on factors like the location, deductible selected, home value, and personal liability limit chosen.

Understanding HO-5 Homeowners Insurance

Compared to an HO-3 policy, an HO-5 homeowners insurance policy provides a more comprehensive coverage approach. These plans are particularly effective for homes of high value or those with valuable belongings, as they feature higher dwelling limits and broader scopes of coverage for personal property.

There are different homeowners policy forms: H0-5 and HO-3 are the two most common

Two of the most common types of homeowners insurance are HO-3 and HO-5 policies, both providing coverage for any damage to dwellings and attached structures like a garage, on an open peril basis.  The main difference between them is their personal property coverage: while the HO-3 policy includes it on a named peril approach, with anything not mentioned being excluded from protection. In terms of insuring items within homes – like furniture or electronics — HO 5 policies provide broader coverage as they offer this protection on an open peril basis. This type of policy includes all types of losses other than those specifically excluded.

Benefits of Choosing an HO-5 Policy

Choosing an HO-5 policy offers a few benefits, such as more extensive protection and higher coverage limits. It provides the option to guarantee replacement cost for one’s dwelling while also including open peril and replacement cost insurance coverage for personal property items.

Broader Coverage

As stated earlier, an HO-5 policy offers potentially higher coverage limits for a home and broader protection for its personal belongings than an HO-3 policy. It typically protects against all types of loss except those explicitly excluded, meaning there is a wider variety of safety measures in place. These policies are pricier compared to the alternative. Yet they do provide additional coverage, which makes it worth considering as one’s main insurance option.

Open Peril Coverage vs. Named Peril Coverage

While HO-3 and HO-5 policies typically insure the dwelling and attached structure under an open-perils basis, when it comes to coverage for personal property, there is an essential distinction between the two. With an HO-5 policy, your possessions are insured on an open perils basis against any form of damage or loss, apart from the exclusions stated in the policy. On the contrary, with an H0-3 policy, you will be provided with named peril protection that only provides cover against specific dangers set out in your insurance agreement. Given this distinction, HO-5 plans are more complete forms of coverage versus their HO-3 counterpart when seeking broader protection for belongings.

Higher Coverage Limits

Homeowners who purchase HO-5 policies can benefit from the availability of higher coverage limits, which provide extra financial security. With more costly homes and assets at stake, it is important to have protection in place that will allow for a full replacement should your home or possessions be damaged by an unforeseen event. To obtain these higher values, often an HO-5 policy may be required. The peace of mind these kinds of policies offer ensures both homeowners and their belongings are adequately covered with proper insurance that’s carefully selected in terms of amount and scope.

Replacement Cost Coverage

HO-5 policies also provide a higher level of protection than HO-3 by offering replacement cost coverage instead of actual cash value for personal property. This means that if you experience damage to your belongings, your insurance can pay to replace what is lost without considering its depreciated value. For items with high monetary worth, which may have gone down over time, this could mean significantly more money received from an insurance claim compared to standard coverage under the HO 3 policy type which considers the likely lower depreciated value.

Option for Extended Replacement Cost or Guaranteed Replacement Cost for Dwelling

When it comes to your dwelling, HO-5 policies provide the option for increased coverage through extended or guaranteed replacement cost. If you need more funds than what your policy’s dwelling limit covers for rebuilding, extended coverage can provide up to 50% more coverage. Guaranteed coverage ensures that all necessary funds will be available for a complete reconstruction, even if it exceeds your policy’s dwelling limit. While some HO-3 policies may offer this coverage as an option, HO-5 policies will almost always provide either an option for additional coverage or provide it standard in the policy offered by the carrier. It’s important to consider that factors like inflation or increased demand during extreme weather events can drive up the cost of rebuilding your home, making extended or guaranteed replacement cost a wise investment.

Key Exclusions in HO-5 Policies

HO-5 policies offer several benefits, but it’s important to be aware of their main exclusions. These can include:

  • water and sewer backup caused by things like sump pumps or drains,
  • limited coverage for certain mold causes, added costs to rebuild due to new laws or ordinances since your home was constructed,
  • intentional damage or neglect,
  • war and nuclear incidents,
  • many home-based business activities, and
  • earthquakes, and floods.

Understanding the specific exclusions of a home insurance policy can help you choose the most suitable coverage for your requirements.

Customizing Your HO-5 Policy

The HO-5 policy is a good option for personalizing a coverage plan to meet individual needs. It allows for the addition of scheduled or blanket personal property protections, which can provide more customized coverage for high-value personal property. To better understand these options, let’s take a closer look at each one.

Scheduled and Blanket Personal Property Coverage

If you have an HO-5 policy, you can choose between two types of personal property coverage: Scheduled and Blanket. Scheduled coverage lets you specify the exact items and their corresponding values that require extra protection, while Blanket coverage provides a generic protection amount for all covered possessions without specifying individual values. Scheduled coverage is best for high-value individual items, while Blanket coverage works well when you don’t have individual appraisals or frequently swap items in and out of your collection, such as bottled wine.

Factors Affecting HO-5 Policy Costs

Choosing the right HO-5 policy that suits your needs involves comprehending various aspects. These consist of a deductible, Coverage A limit (that represents your home’s value), personal property coverage, personal liability limits, and underwriting factors like location and insurance score that can have an impact on the cost. All of these factors should be considered while selecting the most appropriate plan that meets your demands.

Deductible Selected

When choosing an HO-5 policy, the cost can vary depending on the deductible you select. Typically, the higher your chosen deductible, the lower your insurance rate will be. It’s crucial to consider both your budget and your comfort level with risk when choosing a plan. While some insurance policies offer deductibles of a few thousand dollars or less, an HO-5 policy may allow you to choose a deductible as high as $100,000. However, keep in mind that if you opt for a larger self-retention amount for any claims, you’ll be responsible for more of the costs yourself instead of relying on the insurer to cover it. It’s also important to ensure that your lender approves this approach if there’s a mortgage in place and the institution has guidelines on acceptable deductibles.

Home Value or Coverage A Limit

When it comes to the cost of an HO-5 policy, the dwelling value or coverage A limit of your home plays a significant role. It’s crucial to understand that this limit is based on the amount required for replacement or reconstruction, not the market value. To accurately determine this value, it’s best to consult an engineer or appraiser who specializes in high-value homes. Keep in mind that policies with higher Coverage A limits will typically have a higher premium than those with lower limits. It’s important to remember that this limit does not reflect the market or assessed value of your home.

Coverage Amounts for Personal Property

When choosing coverage amounts for your personal belongings, it’s important to keep in mind that higher amounts will result in a more expensive HO-5 policy. It’s a good idea to take the time to estimate the value of each possession and select the appropriate amount of protection. Since many policies have sub-limits for personal property items, it’s worth considering a schedule or blanket endorsement to ensure that all valuable items are covered at an appropriate value and that you’ll receive the compensation you expect.

Personal Liability Protection Limit Selected

When you’re deciding on a liability limit for your HO-5 policy, it’s important to consider the coverage you need and any potential risks that could lead to liabilities. Increasing this limit may also increase your premium, but a higher limit can provide greater protection. The premium increase will depend on various factors and insurers. It’s important to choose a level of coverage that meets your individual needs without paying more than necessary. Home insurance policies typically have a limit of $1 million, so you may need additional coverage through a personal umbrella policy or excess coverage. Combining these policies with your personal liability protection under your homeowners insurance policy can provide you with millions of dollars in coverage in many cases.

Underwriting Risks: Location and Insurance Score

The price of your HO-5 policy may vary based on underwriting risks, such as the location of the property and its insurance score. If the property is situated in areas that are prone to natural disasters such as brush fires or hurricanes, the premiums may be higher due to increased risk. Additionally, an individual’s credit rating and past claims history can affect their insurance ranking, which may impact the cost of their coverage.

Choosing Between HO-3 and HO-5 Policies

When deciding between an HO-3 or HO-5 policy, it’s important to consider several factors. You should assess the value of your property, compare the coverage options for personal property (open perils vs. named perils), and determine whether you want belongings replaced at their actual cash value or replacement cost. By carefully evaluating these factors, you can select the insurance option that best meets your needs.

Cost Comparisons

When considering insurance options, it’s crucial to weigh the costs of both HO-3 and HO-5 policies. Although HO-5 plans may have higher premiums due to their increased coverage, they can be beneficial for homeowners with expensive possessions or high-value properties. To determine which policy is most suitable for your circumstances, compare prices from various insurers and evaluate the coverage provided in relation to the associated premium.

How to find your HO-5 Policy

When you’re exploring policy options, it’s essential to take a close look at what’s covered in terms of limitations, sub-limits for personal property, policy deductibles, and any additional features that may be included. Comparing carriers against each other can help you determine which provider best meets all of your criteria.

Leading High-Value Insurance Carriers with Top HO-5 Policies

If you’re searching for HO5 policies, some of the most well-known insurance companies to consider are Nationwide Private Client, AIG, Chubb, Openly, Cincinnati, and PURE Insurance. These providers are known to offer comprehensive HO-5 policies that provide extensive coverage with higher limits for personal property and other structures associated with it.

By exploring their policies, you can find a suitable plan that provides adequate protection for both your home and belongings. It’s crucial to conduct research and evaluate these providers to determine which one will work best for you before committing to any plan. Doing so brings peace of mind, knowing you have coverage in case of any future incidents.

Finding Carriers Offering HO-5 Work with an Independent Insurance Agent

If you are having difficulty obtaining an HO-5 policy, we suggest reaching out to a qualified independent insurance agent. These industry professionals have access to a variety of insurance products and can provide tailored advice to help you choose the most appropriate policy for your circumstances. They will guide you through the entire selection process, ensuring that all your questions are answered, and any concerns are addressed.


If you have a valuable home with expensive personal belongings, HO-5 homeowners insurance is a great option. It offers increased coverage and higher limits for personal property compared to the HO-3 policy. To ensure that you are fully covered and financially protected, consider customizing your HO-5 policy based on your risk level, the value of your home and contents, and other factors. This will provide you with important peace of mind when purchasing your HO-5 policy or another suitable insurance plan.

Frequently Asked Questions

What is an HO 5 insurance policy?

An HO-5 insurance policy is an extensive form of homeowners insurance that covers open perils for your home and personal belongings, except for specific exclusions mentioned in the policy. It provides broader coverage than other types of homeowners insurance, often with greater limits available.

What is the difference between an HO3 and an HO5?

An HO-3 policy provides coverage for structures against any type of damage, but personal property is only covered against specific risks. On the other hand, an HO-5 policy offers full protection against any type of damage for both the structure and personal belongings. Although an HO-5 policy may be more costly than an HO-3, it could be a valuable investment in the long term, especially for protecting personal property.

What is the meaning of HO-5?

HO5 home insurance provides a higher level of coverage compared to HO3 as it follows an open-perils approach. This implies that any harm to both the house and personal belongings is covered, except for the ones mentioned in the policy’s exclusions. In contrast, named perils coverage only safeguards against specific events specified in the plan.

How can I customize my HO-5 policy?

To enhance the protection of your belongings, you can customize your HO-5 policy in various ways. You can add endorsements to provide additional safeguards for valuable items like jewelry, art, wine, coin collections, and antiques. Another option is to opt for scheduled personal property coverage, which involves listing each item or piece along with its corresponding value. Alternatively, you can choose a blanket approach, which offers comprehensive coverage for all included items or pieces up to an agreed amount.

We hope that you find this article helpful!  Notable Risk leverages 20+ years of expert risk-management experience (and both MBA and Law Degrees!) that is not often found at independent insurance agencies. Hopefully, we will have an opportunity to help you with your insurance needs!

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