HO-3 vs. HO-5 Homeowners Insurance: What’s the Difference?

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  • HO-3 vs. HO-5 Homeowners Insurance: What’s the Difference?

There are so many different types of homeowners insurance policies that choosing the right one can be confusing. HO-3 Special Form and HO-5 Comprehensive Form are the two most popular policies. They’re similar in a lot of ways, but it’s important to know their differences before you decide which one is best for your home. 

What’s the Difference Between HO-3 and HO-5 Insurance?

The main difference between an HO-3 policy and an HO-5 policy is in how each one covers your personal property.

HO-3 homeowners insurance, aka Special Form insurance, will reimburse you to replace your personal property (any belongings in your home) if it’s damaged because of a named peril. A named peril is an event – such as a fire or storm – that’s specifically named in your insurance policy.

With HO-3 insurance, if an event isn’t listed in your policy, you aren’t covered for any damage to your personal property caused by that event. HO-3 policies typically reimburse you for items at their actual cash value, which means they factor in the depreciation of the item’s value over time, and you get back less money than you paid for it when it was new. 

HO-5 homeowners insurance, aka Comprehensive Form insurance, covers your personal property in any event except the ones listed in your policy as exclusions. This kind of coverage is called an open peril policy.

HO-5 policies typically reimburse you for items at their replacement cost value, which means you get back however much it costs to replace the item with a new one of similar quality at today’s prices. HO-5 insurance also offers more coverage for high-value possessions, such as jewelry and electronics, than an HO-3 policy would.

HO-3 vs. HO-5: Comparison Chart

See the following chart for a quick, at-a-glance overview of what HO-3 and HO-5 policies have in common and what they don’t. 

HO-3 HO-5
Dwelling coverage (for the structure of your home) Open peril Open peril
Other structures coverage (for any other structure on your property, such as a shed or fence) Open peril Open peril
Personal property coverage (for your belongings) Named perils only Open peril
Liability coverage (in case someone gets hurt on your property) Usually starts at $100,000 Usually starts at $100,000
Loss of use coverage (to help pay for temporary housing if your home is uninhabitable) Usually for a limited time and up to 10% of your dwelling coverage Usually for a limited time and up to 10% of your dwelling coverage
Reimbursement for personal property claims  Actual cash value (original value minus depreciation) Replacement cost value (the cost of buying a new comparable item)
Coverage for high-value items Lower coverage limits Higher coverage limits
Claims process You must prove that the damaged was caused by a named peril  Your insurance company must prove if the damage was caused by an excluded event
Availability  For all homes Only for newer homes in low-risk areas
Cost of premium  Typically lower Typically higher


What is HO-3 Insurance?

HO-3 Special Form insurance is the most common type of homeowners insurance. It’s the minimum amount of coverage required by most lenders if you buy your home with a mortgage. HO-3 policies strike a good balance between adequate coverage and affordable premiums. 

You can add endorsements (which are basically extra add-ons) to your HO-3 policy to raise your coverage limits or switch to replacement cost value reimbursement for personal property. For every endorsement you add, the cost of your premium will go up. 

What Does an HO-3 Cover?

When it comes to structures on your property (your dwelling coverage and other structures coverage), an HO-3 functions as an open peril policy. That means your insurance company will pay for repairs to your home when the damage is caused by any event that isn’t specifically excluded from your policy. 

When it comes to personal property coverage, though, HO-3 insurance only covers your belongings if they’re lost or damaged because of one of the following 16 perils:

  1. Vandalism
  2. Theft
  3. Frozen pipes
  4. Damage caused by vehicles
  5. Damage caused by aircraft
  6. Rioting or civil disturbances
  7. Fire or lightning
  8. Windstorm or hail, such as a hurricane or tornado
  9. Damage from smoke
  10. Damage caused by heating, air conditioning, or plumbing
  11. Damage due to snow, ice or sleet
  12. Damage from water heater, including cracks, burns, or tears
  13. Damage from electrical current, such as downed power lines
  14. Explosions
  15. Falling objects
  16. Volcanic eruptions

If you lose belongings because of a flood, earthquake, or literally anything else not included on this list, HO-3 insurance will not reimburse you to replace those items. 

What is HO-5 Insurance?

HO-5 Comprehensive Form insurance is a more premium type of homeowners insurance that gives you increased coverage for a higher price. HO-5 insurance is known as an open peril policy because it covers both the structures on your property and your belongings no matter why they get damaged. 

There are exceptions to that, though. An HO-5 policy will name some events it does not cover. These events are called exclusions. Common exclusions include but are not limited to flood, mold, and neglect. Check your specific HO-5 policy to see what it excludes. 

HO-5 insurance also comes standard with increased coverage on high-value items like jewelry and electronics, so it’s recommended for any homeowner who has a lot of valuables in their house.

However, not everyone is eligible for HO-5. Because it’s so comprehensive, it’s only available if you own a newer home and live in an area with little to no risk of theft, vandalism, severe weather events, or other issues that might cause damage.

It's Time to Switch Your Homeowners Insurance

We partner with the nation's top homeowners insurance companies so you can get a custom policy at an affordable price.

The editorial content on Clovered’s website is meant to be informational material and should not be considered legal advice.

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