What is an HO-5 insurance policy? (August 2025)

An HO-5 insurance policy is the most comprehensive homeowners insurance policy available in the market. The level of coverage for personal items like furniture, clothing, and appliances distinguishes an HO-5 policy from regular homeowners insurance. An HO-5 differs from a typical HO-3 homeowners policy in two key ways:

• It provides 'open peril' coverage for your home and personal belongings.
• It also offers replacement costs for your personal property

What homeowners need to know about HO-5 coverage?

If an HO-1 policy offers basic coverage, an HO-5 policy is comprehensive. Open-perils forms, which are used to write HO-5 plans, specify the perils your insurance does not cover. HO-5 doesn't cover the damage brought on by these risks.

• Power failure
• Earth movement
• War
• Ordinance or law
• Water damage from floods, water seepage, or sewer backup
• Nuclear hazard
• Theft of a dwelling under construction
• Deliberate loss
• Government action
• Collapse
• Vandalism or malicious mischief
• Mold, fungus, or wet rot
• Smoke from agricultural smudging and industrial operations
• Neglect, wear and tear, and deterioration
• Mechanical breakdown
• Smog, rust, and corrosion
• Discharge, dispersal, or seepage of pollutants
• Settling, shrinking, bulging, or expanding your home's foundation
• Infestation of birds, rodents, vermin, or insects
• Animals owned by the insured

HO-5 is written as open-perils for your home, other structures, and personal property, unlike HO3, which only provides open-perils coverage for your home and other structures. Personal liability and medical payments coverage come in HO-5 insurance, just like in an HO-3 form. As the policy offers extensive coverage, buying HO-5 insurance can be expensive.

What does an HO-5 policy cover?

Your home's physical structure and any additional structures, such as fences, sheds, or detached garages, all get coverage by HO-5 insurance. Additionally, it protects your personal property by protecting it from all dangers unless specifically mentioned in the policy. Additionally, an HO-5 insurance policy eliminates the necessity to demonstrate that damages were brought on by a named risk, which can streamline the claims process.

The HO-5 insurance policy will reimburse your primary residence at the replacement cost value. At the same time, your personal property will be paid out at either actual cost value or replacement cost value.

• Actual cash value expressly considers depreciation of your property while determining your claim settlement. So, you won't receive the whole amount you purchased for your property.
• Replacement cost covers the amount required to replace your property at its present market value.

Personal property: Personal property also covers open perils under the HO-5 policy. It implies that you no longer need to demonstrate that one of the 16 listed risks caused damage to your property. The term 'personal property also refers to items with unique coverage sub-limits. It aims to encourage owners of expensive possessions, such as jewelry, furniture, some types of technology, and paintings, to look into specialized insurance policies. Here are some typical limits.

Personal liability: This insurance provides coverage if someone is hurt physically or has property damaged while on your property. It also extends outside your home, protecting you if your acts result in bodily harm or property damage. In addition, it pays for medical costs, missed wages, and suffering and pain.

Additional living expenses: It pays for your living expenses for a specified time or amount if a covered loss makes your house uninhabitable. Sometimes, this also refers to as 'loss of use.'

Medical payments to others: The coverage, also referred to as 'no-fault' or 'goodwill' coverage, covers the medical costs of those who get hurt on your property. The coverage has a $1,000 basic limit that you can increase. Also, it covers the following costs.

• Medical bills and expenses
• Dental procedures
• X-ray costs
• Surgical costs
• Funeral service expenses
• Ambulance and hospital costs
• Nursing care
• Prosthetic devices

What does an HO-5 policy not cover?

Even though an HO-5 policy provides more security than typical homeowners insurance, there are still a few exclusions to be aware of. For instance, here are some damages that an HO-5 policy would not cover.

• Mold
• Flood
• Hurricane
• Wear and tear
• Vandalism to vacant houses
• Property damage caused by pets
• Earthquakes
• Negligence
• Enforcement of building codes and similar laws
• Intentional acts
• Government acts
• Nuclear hazard
• Off-premises power failure

How much does an HO-5 policy cost?

An HO-5 policy often costs more to maintain than an HO-3 policy since it offers more coverage. Several factors, like the coverage types and limits, the age, size, and condition of the house, and others, influence the insurance cost. The typical annual premium for an HO-3 policy for $250,000 in dwelling coverage is around $1,395.

Reasons to get an HO-5 policy

HO-5 policies do frequently cost more than an HO-3 policy. However, HO-5 policies provide hassle-free insurance; they offer inclusive rather than exclusive coverage for your possessions. When filing a claim, the responsibility of proof is with the insurance company to demonstrate that you are not covered rather than you.

Another advantage of having an HO-5 is that you are protected against damage to your belongings in different situations and up to the maximum amount (i.e., replacement value). Thus, if you possess a large number of expensive objects, it is very valuable. But how can you determine the value of an HO-5 insurance policy?

Make a list of all items you have in your house. Next, write down how much you estimate that each item is worth. Then, check online to see how much it would cost to replace that item if you had to buy it now. Once you've added up the values and know how much your possessions are worth, you can analyze whether an HO-5 policy is necessary.

Where can I buy HO-5 insurance?

Numerous homeowners insurers in the country offer HO-5 insurance. If you are unsure which policy you want, you can request a quote from most insurers who provide both the HO-3 and HO-5 policies. Also, suppose the insurance type you want isn't available on an online quote form. In that case, you can contact them over the phone for more information.

How is an HO-5 policy different from other types of homeowners insurance?

Unlike other coverage types, an HO-5 insurance policy will pay for all damages to your house and the furniture inside. Typically, this damage to personal property doesn't get coverage from other policies. Instead, they cover more common occurrences like theft, fire, and windstorm damage.

Basic HO-3 policy vs. premium HO-5 policy

The most typical type of home insurance is HO-3 coverage. According to the NAIC study, HO-3 form plans make up about 78% of all home insurance policies. In comparison, HO-5 form policies make up just over 14%. The two different policy kinds are comparable in most respects. But when buying a home insurance policy, consider these significant differences.

• Both policy types provide open-peril dwelling coverage, while HO-3 insurance provides named perils for personal property coverage.
• Actual-cash value basis is used for payments under HO-3 plans, whereas the HO-5 policy uses replacement cost.
• With HO-3 insurance, you'll have to pay more for each valued item you want scheduled personal property coverage. Though an HO-5 policy offers coverage, you can pay additionally for extra coverage.

Should I get an HO-3 policy or an HO-5?

Consider the following table before deciding on a policy.

How to get an HO-5 insurance policy with Way.com

Many insurance agents frequently advise clients to choose an HO-3 or an HO-5 policy to give enough coverage. The HO-5 policy, which can be more limiting than the HO-3, typically applies to newer or more expensive homes in locations with greater fire protection. An HO-5 policy can be useful as it provides 'open peril' coverage for your home and personal belongings.

Are you planning to buy an HO-5 insurance policy? Then use Way.com's app or website to find an HO-5 home insurance policy at the most affordable rate. Our home insurance agents can help you if you need additional help. They will explain to you the most complicated home insurance laws, terms, coverages, and discounts. So, contact our home insurance agents if you need the best HO-5 policy.

Looking for another type of homeowners policy? Here are the Seven different kinds of homeowners insurance