• Vincent Fuccilli

HO3 or HO5 Home Insurance Policy - What's the BIG Difference?


HO3 VS HO5 Home Insurance Policy


The HO3 policy is the most commonly used homeowners insurance policy. If you own a home and have home insurance, chances are good that this is the policy form you have.


However, if your prefer greater piece of mind, there is another policy form, called the HO5 policy. It may be lesser known, but it packs a bigger punch. In general, the H05 policy is more comprehensive than the HO3 policy.


The HO3 and H05 home insurance policy both cover your dwelling on an open peril basis. The big difference between the two, is how they protect your personal property.


Named Peril means you only have coverage for perils listed in your policy.


Open Peril means you have coverage for all perils EXCEPT those specifically EXCLUDED in your home insurance policy.


On an HO3 policy, your contents are only covered for specific events (named perils) , leaving holes in your coverage. You, the insured, are required to prove that your personal property was damaged as a result of one of the named perils listed on your policy (i.e, fire, vandalism, sudden and accidental water damage, etc.).


HO5 policies cover your stuff on an open peril basis. This means your items are protected in any event (open peril) unless specifically stated otherwise (see exclusions). Be aware, there are still plenty of exclusions, so you should read your policy very carefully (i.e, flood, termites, wear and tear, intentional acts, and many more) .


The benefit of having an H05 policy is that you are covered in additional circumstances for damage to your personal property. In addition, you "the insured" do not have to prove the damage to your stuff was caused by one of the named perils. The burden of proof for any personal property claim denial under an HO5 policy lies with the insurance company to prove it is not covered.


Also, HO3 policies do not automatically include Replacement Cost Coverage on your personal property (this is an add-on coverage). HO5 policies automatically include replacement cost coverage on contents. However, if you are not buying the policy yourself directly online, most good agents will include Replacement Cost Contents Coverage on your HO3 policy (but check your quote or policy to be sure).



Should you opt for the HO5 Policy


If available and there isn't a big price difference or if there is a big price difference but you are ok with it, then go for it. If anything, it will give you piece of mind of having the more comprehensive home insurance policy. Some carriers, like FMI, only offer HO5 policies.


Here are Some Likely or Unlikely Claim Scenarios


Here are some hypothetical claim scenarios that may help show when I claim may be covered under an H05 policy but may not under H03 policy.

  • A bucket of paint falls off a ladder and splashes all over your $7,000 sofa

  • Your two year old toddler finds a hammer and decides to play Wreck It Ralph with your furniture

  • Big, expensive flat screen tv falls of wall and breaks

  • An inebriated guest accidently releases bodily fluids on your expensive sofa and rug

  • A wild deer jumps through a picture window and goes wild, damaging furnishings before escaping the house

It’s never worth the additional money until you have a claim. Then you may wish your sprung for the more comprehensive policy.


Hope this helps!

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