Home insurance requirement of an individual is definitely not the same as that of his neighbor. To fit the requirements of the individuals, the home insurance policies take different forms. HO3 and HO5 are two common home insurance policies which find use amongst the homeowners.
The basic difference between HO3 and HO5 policies
Standard homeowner's insurance offers coverage for the named perils only. The insured would only receive compensation if it is proved that the property damages or losses took place as a result of the named perils.- A HO-3 policy is a combination of an open peril and a named peril policy.
- A HO-5 policy is an open peril policy.
What is an open peril policy?
Insurance policy which offers coverage against almost all forms of risks that can cause damage to a property. Certain exclusions are however mentioned even in an open perils policy, which are not covered.
What is a named peril policy?
In a named peril policy, specific risks are mentioned against which the insurer provides coverage. If the property damages occur due to any other peril other than those mentioned in the policy, the insurers deny paying for the loss.
HO-3 - How it act likes a combination of open peril and named peril policy?
The HO3 policy acts like an open perils policy when it offers coverage against the property structure. This means the insurer will compensate for the damages to the structure of the insured building or residence, under any circumstances. However, if the damage is caused by any of the excluded peril, the insurers are not liable to pay for it.
The HO3 policy acts like a named peril policy when it offers coverage for the contents of the insured property. Loss or damages to the personal belongings of the homeowner and the home content will only be covered, if those have been caused by the specific perils as pointed out in the policy.Top
HO5 - How it acts like an open perils policy?
HO5 policy acts like an open perils policy, and doesn't discriminate between the home content and structure. Thus, no matter what kind of damage affects the insured property, this form of homeowner's insurance will offer protection. Coverage will only be denied if the cause behind the loss or damage is any one of the excluded perils, specifically mentioned in the policy.Top
Named perils for HO3 policy.
A standard HO3 policy offers coverage for 16 named perils as mentioned below:- Theft
- Fire or Lightning
- Explosion
- Smoke
- Freezing
- Vehicles
- Falling Objects
- Volcanic Eruption
- Windstorm or Hail
- Riot or Civil Commotion
- Damage caused by Aircraft
- Vandalism or Malicious Mischief
- Damage due to weight of Ice, Snow, or Sleet
- Sudden & Accidental Tearing Apart, Cracking, Burning, or Bulging
- Sudden & Accidental Damage from Artificially Generated Electric Current
- Accidental Discharge or Overflow of Water from Plumbing, Air conditioning etc.
Excluded perils for both HO3 and HO5 policy
The exclusions are more or less same for both HO3 and HO5 insurance policies as mentioned below:- Power failure
- Industrial pollution or smoke
- Earth movement (earthquake)
- Water damage due to flood
- Intentional loss
- War
- Nuclear Accidents
- Pets and other animals, insects and pests
- Settling, wear and tear
- Act of negligence
- Actions taken by government and other associations
- Legal action due to lack of proper permits, defective construction, design or maintenance
- Theft or Damage from vandalism in vacant dwellings or in dwellings under construction
- Deterioration due to weather conditions, that aggravates other excluded causes of loss
Which is better?
HO3 and HO5 policies can be compared on the basis of certain parameters as mentioned below:- Coverage - A HO5 policy is considered better than a HO3 insurance policy as far as coverage is concerned. It is so, since the former ensures wider coverage for both the structure and the contents of the insured home.
- Cost - A HO5 Policy is more expensive than a HO3 insurance policy. For those who are looking for an affordable coverage, HO3 policy seems to be the better choice.
- Popularity - HO3 insurance policies are apparently more popular with the homeowners. It is economical and offers coverage against most of the common perils.
The limitations of the HO3 can be overcome, if additional endorsements are added on to the basic coverage. However, that will raise the costs.
If you've to pick between a HO3 and a HO5 policy, the latter ensures the better coverage. An open perils policy is evidently a better choice than a named perils policy.
All said and done, your preference between the two forms of policy will essentially be influenced by your financial limits and the extent of coverage that you need. Top
Related discussions
- HO3 vs HO8: Which one the homeowner should choose
- Home Insurance: Home owners guide to insurance
- HO3 - Ho2
Posted: Wed Mar 20, 2013 10:11 pm Post Subject: termites
Is a home with a known history of termite infestation insurable?
Posted: Wed Mar 20, 2013 10:54 pm Post Subject:
Possibly. But a requirement of the insurance company could be to fix all the preexisting damage as a condition of coverage. The known information must be disclosed to the insurance company, if not, it's called CONCEALMENT and will void your coverage in the event of a related claim.
Posted: Fri Apr 19, 2013 03:43 pm Post Subject: HO3 / HO5 Settlement
My understanding is that the HO3 settles cov A and B at RCV and Cov. C at ACV. Is that the same for the HO5? Or, does the HO5 settle all three coverages at RCV? Please help. Thanks.
Posted: Fri Apr 19, 2013 09:43 pm Post Subject:
No, the difference is open peril on structure and broad form on personal property in the HO3 and open peril on all in the HO5. Settlement is the same in both RC for structure and ACV for personal property. Open peril is "all risk" except for named exclusions, which can be a lengthy list.
Posted: Mon Oct 07, 2013 09:47 pm Post Subject:
How does an HO-5 Broad Form Policy stack up against a traditional HO-3 Special Form
Posted: Tue Oct 08, 2013 04:10 am Post Subject:
Read the post above yours. All you need to know is right there. Open peril means that all perils are covered except those specifically excluded.
Posted: Tue Dec 10, 2013 02:50 pm Post Subject: cracked sewer line
I had a cracked sewer line between my home and the street. I understand that the pipe repair is not covered but what about the excation to get to the leak? The damage to the lawn and sidewalk?
This is a sudden an accidental claim where the pipe collapsed. Should I submit to the carrier?
Posted: Tue Dec 10, 2013 03:26 pm Post Subject:
You have to read the coverage parts in your policy. Don't know where it is? Call your agent or call the insurance company and request a duplicate policy. Typically, losses as you describe are not covered. Not the repairs to the pipe and not the excavation to get to it.
Posted: Wed Sep 03, 2014 11:28 am Post Subject: HO 5 vs HO3
Give me a few SPECIFIC examples of personal property losses covered under HO5, but, not covered under HO3.
Posted: Mon Sep 08, 2014 03:32 pm Post Subject:
Your identical question as a member was answered here: http://www.ampminsure.org/manage/about21087.html
Add your comment