The HO5 Home Insurance Policy is one of the best home insurance policies available in the United States. It provides excellent coverage for both your home and personal property.
HO5 Home Insurance Policy
HO5 Insurance Coverage is for Open Perils
The HO5 insurance policy is an open perils insurance policy. This means that it covers anything and everything that could damage the physical structure you live in (called the dwelling) and all the stuff you own (called your personal property), with a few exceptions.
An open perils policy like the H05 specifically lists all perils your policy does not cover. Those exceptions are listed in the policy. If an event damages your dwelling or personal property that is not listed in the exclusion list, good news: it’s covered under the policy!
HO5 Insurance Open Peril Exclusion List
There are 21 perils that are typically excluded from the standard HO5 policy. Below is a list of those perils, and this applies to both the dwelling and personal property:
Although the list above is the default exclusion list for the HO5, there are some minor clarifications that need to be made.
First, most water damage is excluded, but not all. Sudden & Accidental Water Damage is covered by HO5 policies. Many of the other types of water damage, like Water Backup, can be endorsed onto the policy for an additional premium. You can learn about all the different types of water coverage here.
Second, some coverage for Collapse, for Mold, Fungus, or Wet Rot and for Ordinance or Law may be provided depending on the insurance company offering the HO5 insurance policy. It is not common, but some policies will include carve outs for these perils.
Third, Vandalism and Malicious Mischief is only excluded if the dwelling has been vacant for more than 60 days. If you are living in the home, this type of damage to the dwelling will typically be covered through the HO5.
Finally, just because the H05 excludes certain perils doesn’t mean you can’t get coverage for them. There are many companies that offer earthquake coverage today, which is normally excluded.
HO5 Insurance is a Replacement Cost Policy
The HO5 home insurance policy is normally written as a Replacement Cost policy rather than an Actual Cash Value policy.
Replacement cost coverage simply means that if anything needs to be replaced, it will be replaced with brand new materials at today’s cost, regardless what the material was worth at the time it was destroyed.
For example, if your house burns down, replacement cost policies should cover the home to be rebuilt with brand new lumber at today’s prices.
Actual cash value policies depreciate the value of the material that was damaged before paying out on claims. This means you could be paying out-of-pocket the difference between the cost to replace your home and the money received from insurance.
Home Policy Comparison - Baseline HO5
Where does the HO5 policy stand compared to other policies? It’s near the top, but not at the top. Here is a quick look at other home insurance policies and how they stack up to the H05:
Less Coverage: HO1, HO2, HO8, HOA, HOA+, HO3, HOB
Roughly Equivalent Coverage: HOC
More Coverage: None; this is one of the best policies
