What Is an HO-5 Form?
Sometimes called the comprehensive form, an HO-5 policy is a type of home insurance written on an open-perils basis. This means your insurer covers damage to your home and personal property when it’s caused by an event, or peril, as long as it’s not listed as an exclusion in the policy.
What Homeowners Need to Know about HO-5 Coverage
If an HO-1 form is considered a bare-bones policy, then HO-5 is a robust homeowner’s insurance policy with all the bells and whistles. HO-5 policies are written on open-perils forms, which means it lists the perils that your insurance doesn’t cover. HO-5 usually excludes losses caused by:
- Earth movement
- Ordinance or law
- Water damage from flood, sewer backup, or water seepage
- Power failure
- Nuclear hazard
- Intentional loss
- Government action
- Theft to a dwelling under construction
- Vandalism or malicious mischief if vacant more than 60 days
- Mold, fungus, or wet rot
- Neglect, wear and tear, and deterioration
- Mechanical breakdown
- Smog, rust, and corrosion
- Smoke from agricultural smudging and industrial operations
- Discharge, dispersal, or seepage of pollutants
- Settling, shrinking, bulging, or expanding of your home’s foundation
- Infestation of birds, vermin, rodents, or insects
- Animals owned by insured
Unlike HO-3, which offers open-perils protection for the home, HO-5 is written as open-perils for both your home and your personal property. Let’s say, for example, a neighbor drives their car through your living room. HO-5 may pay for both the damage to your dwelling and the furniture inside. Other forms typically won't cover that cause of damage to personal property. They cover more typical incidents, like damage caused by windstorms, fire, theft, etc.
Like an HO-3 form, HO-5 policies also include personal liability and medical payments coverage.
Broader coverage often costs more, and HO-5 policies are no exception. You need to weigh the extra premium against the value of the additional protection.
3 Questions to Ask about an HO-5 Policy
Before you buy your home insurance, ask your agent:
- Is this an all-risk or open-peril policy? The HO-5 form is standardized across the industry, but insurance carriers may market it under different names. Make sure you understand whether your policy is written as an open-peril or named-peril policy.
- Are there any additional exemptions? HO-5 may be called the comprehensive form, but that doesn’t mean it covers all property in all instances. Most policies have limited coverage for high-ticket items and may exclude others completely. That’s when scheduled personal property coverage comes in handy. It extends your limits on specific items to make sure they’re properly insured.
- Does this policy pay the full replacement costs? Most home insurance is written as actual-cash value policies, which offers you less financial protection and only pays out what the depreciated item is worth. That’s why Kin only sells replacement-cost coverage – it actually helps you replace your lost items with new ones.
As a reminder, an HO-5 policy is robust, but an HO-3 policy is a good fit for those who want reliable, extensive coverage that’s also affordable. Ask your agent what is appropriate for your needs.