Home Insurance Insights
What Is the Difference Between an HO-3 and an HO-5 Homeowners Policy?
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Home Insurance Insights
If you are in the market for home insurance, you may be uncovering a wide variety of homeowners policy options in your research—eight to be exact. From a Homeowners 1 Policy (or HO-1) all the way up to a Homeowners 8 Policy (or HO-8), each different policy type is numbered to signify the level of coverage it includes or the type of property it is designed to cover. The Homeowners 6 Policy (or HO-6), for example, is designed specifically for condo unit owners.
Despite all the different types of policies available, it is very likely your home will be properly covered by either an HO-3 or an HO-5 insurance policy. Not only are HO-3 and HO-5 the most common homeowner policy types, but both also provide significantly broader coverage than other options because they include six essential home insurance coverages—dwelling, other structures, personal property, loss of use, medical payments, and personal liability.
All things being equal, a homeowner may want to select the policy that simply costs less. However, there are key differences between an HO-3 and HO-5 that you should carefully consider before you make a final coverage decision.
The primary distinguishing factor between these two policies is the coverage they provide for your personal belongings.
An HO-3 insurance policy covers the contents of your home for losses due to specifically named perils found in your policy. This list may contain as many as 16 common threats. However, if you experience a loss not on this list, it will not be covered, leaving you to fund the repair and replacement bills.
In comparison, an HO-5 insurance policy offers more complete protection for your personal property. This type of homeowners insurance provides open perils coverage for your home’s contents, which typically means that all losses are covered unless they are explicitly listed in your policy as exclusions.
To illustrate how this difference may impact you and your wallet, consider six real-life home insurance claims scenarios:
A standard HO-3 policy does not include any of these situations as named perils. So, if you had this type of coverage, you would be left financially responsible for the thousands of dollars worth of personal property damage caused by these events. On the other hand, if you have an HO-5 policy and it does not explicitly list these events as being excluded from coverage, you will typically receive a claims payout from your insurance company to assist you with recovering from your losses. In addition, because it provides more inclusive coverage, having an HO-5 policy is likely to simplify the process of reporting a claim.
At The Andover Companies, we offer homeowners a form of the HO-5, called Superior Home Insurance Protection Plan, that includes even broader personal property coverage than a standard HO-5.
With the typical HO-5 (or HO-3) policy, your items are insured for their actual cash value. This means you may receive a claims payout after a covered loss to personal property, but it will be less depreciation and therefore may not be enough for you to cover the purchase price of a brand-new item of like kind and quality.
The Andover Companies Superior HO-5 product automatically insures your belongings at their replacement cost value. So, if you have a personal property claim, there is no deduction for depreciation, which usually means you get reimbursed for the full cost to replace the damaged or stolen items with comparable ones.
To help make your homeowners policy decision easier, we encourage you to reach out to a local insurance agent who can compare the home insurance policy offerings from a variety of insurance companies to help you get the most complete and competitively priced coverage. They can also assist you in determining if the property protection provided by our enhanced home insurance product will be beneficial based on your unique home and its contents, as well as check if your home meets certain Superior HO-5 eligibility requirements.
No matter which home insurance policy you choose, there may be risks specific to your distinct property, belongings, and lifestyle that will not be covered. For this reason, your insurance professional may recommend other important additional coverages, such as home systems protection and service line coverage, scheduled personal property, water backup, home cyber protection, or a personal umbrella liability policy, that will enable you to customize a homeowners policy to fit your specific requirements.
“I feel comfortable having my insurance with The Andover Companies. I know that if something terrible happens, they will be there to support my family and guide us through the process. Insurance can be confusing, especially when you have multiple policies, but they have simplified the details so we can understand everything easily!”
“The Andover Companies service team is professional, personable, and extremely helpful. We’ve had our homeowners insurance with The Andover Companies for over six years and are happy to have recently added our secondary home with them in another New England state. I highly recommend insuring with them.”
“You can truly understand the value of your home insurance when you have a claim. My husband and I experienced firsthand how easy it was to work with The Andover Companies. A tree fell on our property, blocking the driveway. We submitted a claim with Andover and within days had a check in hand to reimburse us for the tree removal. The process was seamless.”
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