What is an HO-5 Insurance Policy?
HO-5 policies offer the broadest level of homeowners coverage, protecting both your home and belongings with fewer restrictions:
- Covers your home and personal property on an open-peril basis
- Pays claims based on full replacement cost rather than depreciation
- Includes liability protection and additional living expenses iI you’re displaced
What is an HO-5 home insurance policy?
A home is the biggest investment most people will make in their lifetime, so it’s important to get the right homeowners insurance policy. If you want an all-encompassing policy, consider going with an HO-5.
The most comprehensive form of home insurance, an HO-5 policy is essentially the 'Cadillac option.' It goes furthest in covering you, your home, and your valuables. Unlike HO-2 and HO-3 policies, which cover specifically named perils (causes of a loss), the HO-5 policy covers all perils unless they are explicitly listed in your policy as being excluded. This type of policy is known as “open peril.”
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What does an HO-5 policy cover?
An HO-5 policy covers the physical structure of your home as well as any other structures, like fences, a shed, or a detached garage. It also covers your personal belongings, insuring them against all threats unless specifically named by the policy.
Furthermore, an HO-5 policy basically removes the need to prove that damages were caused by a named peril, which can simplify the entire claims process. Some of the more common named perils that are covered by both HO-3 and HO-5 policies include the following:
- Lightning or fire
- Hail or windstorm
- Damage caused by aircraft
- Explosions
- Riots or civil disturbances
- Smoke damage
- Damage caused by vehicles
- Theft
- Vandalism
- Falling objects
- Volcanic eruption
- Damage from the weight of snow, ice, or sleet
- Water damage from plumbing, heating, or air conditioning overflow
- Water heater cracking, tearing, and burning
- Damage from electrical current
- Frozen pipes
An HO-5 policy will reimburse your primary dwelling at replacement cost value, while your personal property is reimbursed at either actual cost value or replacement cost value — depending on the specifics of your policy.
- Actual cash value looks specifically at the depreciation of your property when considering your claim payout, meaning you will not get the full value that you paid for it.
- Replacement cost covers the amount needed to replace your property at its current market value. This is a more comprehensive form of coverage.
✅ Personal property
The HO-5 policy extends open-peril coverage to personal property as well. This means that you no longer have to prove that your property was damaged by one of the 16 named perils.
Personal property also includes items that have special coverage sub-limits. This is meant to encourage those with high-value items like jewelry, furniture, certain electronics, and paintings to seek out special insurance options for them. Below are standard limitations.
| Sub-limit | Property | Limitations |
|---|---|---|
| $200 | Money, gold, coins | |
| $1,500 | Jewelry, watches, furs | Theft-only |
| $1,500 | Watercraft, trailers | |
| $2,500 | Firearms | Theft-only |
| $2,500 | Silverware | Theft-only |
| $2,500 | Business property | On-premises |
| $500 | Business property | Off-premises |
| Varies | Electronics |
If any item you own is above the sub-limit listed, you should consider adding an endorsement to your policy. An endorsement would increase the sub-limit level of any category of items. If you have one particular item of value, such as an engagement ring, you should consider a scheduled endorsement. A scheduled endorsement is specific to one item and requires an appraisal. However, if the item is very valuable, it is the best way to ensure it is protected.
✅ Additional living expenses
If a covered loss renders your home unlivable, this coverage provides for your living expenses for a certain amount of time or up to a certain monetary limit. This is sometimes known as "loss of use."
✅ Personal liability
This coverage protects you should someone suffer bodily injury or property damage on your insured property. It even stretches beyond your property, providing protection for you in the event that your actions cause bodily injury or property damage anywhere. It covers medical expenses, lost wages, and pain and suffering.
✅ Medical payments to others
Also known as “no-fault” or “goodwill” coverage, this coverage pays the medical expenses of individuals injured on your property. The base limit of this coverage is $1,000, though it can be increased. It may cover the cost of:
- Medical bills and payments
- Surgery costs
- Ambulance or other hospital fees
- X-rays
- Dental work
- Nursing care
- Prosthetic devices
- Funeral expenses
What does an HO-5 policy not cover?
While the HO-5 policy offers more protection than other home policies, there are still exclusions. They include the following:
- Flood*
- Hurricane
- Mold**
- Vandalism to vacant dwellings
- Wear and tear
- Property damage caused by pets
- Earthquakes***
- Enforcement of building codes and similar laws
- Intentional acts
- Neglect
- Government acts
- Nuclear hazard
- Off-premises power failure
Exclusions can be confusing, so it's important to educate yourself and ask questions. Ultimately, there is an endorsement or add-on policy option for most risks, so don't be afraid to shop around and find the best solutions for your peace of mind.
*You can get flood insurance through FEMA in many states.
**Some policies allow the addition of limited mold damage coverage.
***You can add earthquake insurance separately.
HO-5: what to consider
Insurance agents often recommend an HO-3 or HO-5 policy depending on your home’s age, value, and location. An HO-5 is usually the right fit for newer or higher-value homes in lower-risk areas, and it offers the broadest protection available.
If your home qualifies and you want the most complete coverage for your house, personal property, and liability, an HO-5 can give you extra peace of mind. You can explore options and compare quotes online to see if it’s the right fit for you, or reach out to our helpful agents to chat through scenarios.
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HO-5 insurance policy FAQs:
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