HO3 vs HO5 Homeowners Policies
 

What are the differences between an HO3 and an HO5?

The HO3 has been the standard homeowners policy for decades, and is adequate for most home owners' personal insurance needs. For older homes, it's still a good choice. But today, there's something better, particularly for newer, well maintained homes. It's known generically as the HO5.

While the HO5 is offered only on a limited basis - to newer homes, those with higher values, those meticulously maintained - if you're eligible, you should protect yourself with this broader policy form. In some cases, depending on the year of construction, the town you live in, your claims history, and other rating factors, you can buy an HO5 for slightly more than a traditional HO3.

The starting point of the HO5 is how it covers your Contents (also known as Personal Property on your policy page). While the HO3 covers your Contents on a "named perils" basis, the HO5 covers contents on an "open perils" basis.

In addition, many of the limitations of the HO3 are removed, existing coverages expanded, and new coverages added. Several common provisions that have had to be added to the HO-3 by specific endorsement are included automatically in the HO5. For example, with an HO5, you don't have to check to see if "replacement cost" coverage on your home and on your contents has been added to your policy as it's included automatically.

“Perils" is the insurance industry's term for what's insured against in a property policy. There's a fundamental difference between "Open" and "Named" perils coverage:

Open Perils provides insurance coverage for any reason not specifically excluded.

Named Perils provides coverage only for those perils listed in the policy, such as fire, theft, falling objects and vandalism.

Since we don't know what the future brings, if you're eligible for an HO5, get it.

An interesting point of interest for us Audiophiles is that any damage our equipment might sustain from a utility surge, or non-direct lightning strike is “Not Covered’ under an EO3 policy. The same however would be Covered under an EO5 policy.

Very helpful- thank you!

interesting Ivan, thanks for the 'heads up' ......

Thanks Ivan. Great information. I will pursue this for our new home.

Is that an H05 or an E05?

Policy is an HO5

For those with higher end homes I would also strongly recommend Chubb. In fact when a surge hit my home many years ago they covered the extensive damage to my various systems in the house without any questions. Great insurance to deal with but probably not the cheapest.

An insurance company named “Chubb”?

https://m.youtube.com/watch?v=CpiP_jN1Pv4

They have full and half versions of their policies. :)
Seriously I have an umbrella policy with them. Top shelf.

Thanks for posting this info, Ivan. Homeowner's insurance can be one of the most important things we buy, yet many people fail to give it its due attention. Speaking from sad experience, having a good policy with excellent coverage helped saved my sanity once, decades ago after a major loss. The carefully chosen policy and the agent's familiarity with my house and circumstances made all the difference. Your homeowner's insurance terms deserve the same scrutiny as your investments. And for many people, umbrella insurance is something else that is worth considering.