What Is HO5 Insurance and What Does It Cover?

HO5 insurance is a comprehensive homeowner’s policy offering broad protection for a dwelling and its contents. It provides high security against potential risks.

HO5 Coverage Details

An HO5 policy provides “open perils” coverage for the dwelling (Coverage A) and other structures (Coverage B), like detached garages or sheds. It covers all causes of loss unless explicitly excluded. Common perils include fire, theft, vandalism, and certain water damage.

A key differentiator for HO5 is “open perils” coverage for personal property (Coverage C). Unlike policies listing only “named perils,” an HO5 covers personal property against all risks not excluded. This applies to items like furniture, electronics, clothing, and appliances.

HO5 policies commonly include replacement cost value (RCV) for both the dwelling and personal property. RCV coverage pays to repair or replace damaged property with new materials or items of similar kind and quality, without depreciation. This contrasts with actual cash value (ACV), factoring in depreciation.

Beyond property protection, an HO5 policy includes additional living expenses (Coverage D) and personal liability coverage (Coverage E). Additional living expenses (loss of use coverage) help cover increased costs if a homeowner must temporarily relocate due to a covered loss. These can include hotel stays, temporary housing, and additional food costs. Personal liability coverage protects if the policyholder is found responsible for injury to another person or damage to their property.

Key HO5 Exclusions

Despite its broad “open perils” nature, an HO5 policy does not cover every cause of loss. Exclusions are common across all homeowner policies, typically for catastrophic events or issues from neglect or maintenance.

Common exclusions include damage from floods, earthquakes, and earth movement. These perils are excluded as widespread, catastrophic events requiring separate, specialized policies, such as flood insurance or an earthquake endorsement. Other common exclusions include war, nuclear hazard, governmental action, and neglect.

Specific water damage, like sump pump overflow or sewer backup, is excluded unless an endorsement is added. Damage from mold, fungus, rot, mechanical breakdown, normal wear and tear, and pest infestations (e.g., birds, vermin, rodents, insects) are not covered. Vandalism may also be excluded if the home has been vacant for an extended period (often over 60 days).

Eligibility and Suitability

HO5 policies are typically offered to a specific subset of homes and homeowners. Insurers often reserve this policy type for newer, well-maintained homes in lower-risk areas. This aligns with properties having a reduced likelihood of frequent or severe claims.

Homeowners with valuable personal property often find HO5 coverage appealing. The “open perils” protection for personal belongings means high-value items like electronics, artwork, or jewelry receive broader coverage than under “named perils” policies. This leads to more straightforward claims handling for expensive possessions.

Individuals seeking the highest level of comprehensive coverage for their dwelling and personal belongings are ideal candidates. While more expensive, the enhanced protection can be a worthwhile investment for those prioritizing extensive financial security. Eligibility criteria vary by insurer; a homeowner’s claims history can also be a factor.

Distinction from Other Common Homeowner Policies

The HO5 policy stands out, particularly when compared to the HO3 policy, the most common form of homeowner’s insurance. Both HO3 and HO5 policies provide “open perils” coverage for the dwelling and other structures, covering loss unless specifically excluded.

The primary difference between an HO5 and an HO3 policy lies in personal property coverage. An HO5 extends “open perils” coverage to personal belongings, covering all risks not explicitly excluded. In contrast, an HO3 policy typically covers personal property only against “named perils.” “Named perils” refers to a specific list of events, such as fire, theft, windstorm, or vandalism. If damage occurs from a cause not on this list, an HO3 policy generally would not cover it.

This distinction means an HO5 policy offers significantly broader protection for personal items. For instance, if personal property is damaged by an unusual event not explicitly named in an HO3 policy’s perils, an HO5 would likely cover it unless excluded. While other policy forms like HO1, HO2, HO4 (renters), and HO6 (condo) exist, the HO3 comparison best illustrates HO5’s comprehensive nature. The enhanced HO5 coverage often results in a higher premium than an HO3.