An HO-5 insurance policy is a type of homeowners insurance that provides comprehensive coverage for both the dwelling and personal property. It is considered to be a “high-end” policy and is also known as a “Broad Form” policy. It is the second most popular homeowners insurance policy with 13.14% of the market, according to the NAIC.
What does an HO-5 insurance policy cover?
An HO-5 insurance policy covers several different types of coverage, including:
Coverage A: Dwelling Protection
This coverage provides protection for the physical structure of the insured’s home, including the walls, roof, and other permanent fixtures. It also includes coverage for detached structures such as garages, sheds, and fences.
Coverage B: Personal Property Protection
This coverage provides protection for the insured’s personal belongings, such as furniture, electronics, and clothing. It also includes coverage for personal property located away from the home, such as in a storage unit or at a vacation home.
Coverage C: Loss of Use Protection
This coverage provides protection for additional living expenses if the insured is unable to live in their home due to a covered loss. It can include expenses such as temporary housing, food, and transportation.
Coverage D: Personal Liability Protection
This coverage provides protection for the insured in the event they are found liable for bodily injury or property damage to another person. It can also include coverage for medical payments to others.
Coverage E: Medical Payments to Others
This coverage provides protection for medical expenses incurred by a guest who is injured on the insured’s property.
What perils does an HO-5 policy protect against?
An HO-5 policy provides “all-risk” coverage, which means it protects against a wide range of perils, including:
- Fire and lightning
- Windstorms and hail
- Explosions
- Riots and civil commotion
- Damage caused by aircraft or vehicles
- Smoke damage
- Vandalism and malicious mischief
- Theft
- Volcanic eruption
- Falling objects
- Weight of snow, ice, or sleet
- Water damage from plumbing, heating, air conditioning, or fire-protective sprinkler systems
- Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, air conditioning or automatic fire-protective system.
What does an HO-5 insurance policy not cover?
An HO-5 policy does not cover certain types of losses, including:
- Floods, earthquakes, and landslides
- Damage caused by pests or vermin
- Normal wear and tear
- Intentional acts
- Nuclear hazard
- War or military action
- Government action
- Power failure
HO-5 policy endorsements
An HO-5 policy can be endorsed to add additional coverage for certain types of losses that are not included in the standard policy. These endorsements can include coverage for floods, earthquakes, and other types of natural disasters.
How much does an HO-5 policy cost?
According to the National Association of Insurance Commissioners (NAIC), the average yearly premium for an HO-5 policy is $1,471, or approximately $123 per month. However, the cost of an HO-5 policy can vary widely depending on a number of factors, including the value of the home and personal property, the location of the home, and the level of coverage desired.
The following table provides an overview of the average yearly and monthly premium for an HO-5 policy based on the insurance range of the home:
| Insurance Range | Average Yearly Premium | Average Monthly Premium |
|---|---|---|
| $49,999 and under | $632 | $53 |
| $50,000 – $74,999 | $1,069 | $89 |
| $75,000 – $99,999 | $1,026 | $86 |
| $100,000 – $124,999 | $960 | $80 |
| $125,000 – $149,999 | $967 | $81 |
| $150,000 – $174,999 | $970 | $81 |
| $175,000 – $199,999 | $990 | $83 |
| $200,000 – $299,999 | $1,065 | $89 |
| $300,000 – $399,999 | $1,213 | $101 |
| $400,000 – $499,999 | $1,412 | $118 |
| $500,000 and over | $2,853 | $238 |
It is important to note that these are averages and prices can vary widely depending on the location, coverage, and other factors. It’s important to shop around and compare quotes from multiple insurance companies to find the best policy for your specific needs.
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Difference between HO-5 and HO-3 policies
The main difference between HO-5 and HO-3 homeowners insurance policies comes down to the level of coverage for personal property. An HO-3 homeowners policy covers your personal property only if it is damaged by a cause named on your policy. In addition, HO-3 policies typically cover your property’s cash value, but not necessarily the replacement cost. In some cases, you can add additional coverage to an HO-3 policy.
On the other hand, an HO-5 homeowners policy covers all damage to your personal property except for damages explicitly excluded from your policy. This might be a good option if you have more valuable personal property, as it’s a more comprehensive coverage type. An HO-5 policy covers the replacement cost of your items, not just the cash value.
When it comes to scheduled personal property, such as valuable items like engagement rings or art, HO-3 policies require additional coverage to be added on an item-by-item basis. On the other hand, HO-5 policies include additional coverage for these types of items as part of the standard policy.
| HO-3 | HO-5 | |
|---|---|---|
| Dwelling coverage | Open Perils | Open Perils |
| Personal property coverage | Named Perils | Open Perils |
| Reimbursed | Actual cash value | Replacement cost |
| Scheduled personal property | Additional coverage | Built in |
Who needs HO-5 insurance?
An HO-5 policy is typically recommended for homeowners who have higher value homes or personal property and want the most comprehensive coverage available. It is also a good option for homeowners who live in areas that are prone to natural disasters or other types of perils that are not covered under a standard homeowners policy. Additionally, those who want more coverage than a standard policy offers and are willing to pay more premium may choose this type of policy. Overall, an HO-5 policy is a good fit for homeowners who want the most protection available and are willing to pay a higher premium for that protection.
