What Is an HO-5 Home Insurance Policy?

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At some point, insurance policy types might start to get jumbled together in your head. What’s the difference between HO-3 and HO-5, again? What about HO-2? Here at Hippo, our team of insurance experts wants to make sure you’re making the most informed choices. In this guide, we’ll talk about what an HO-5 policy is and why it might be a good choice for your family. 

Often, insurance providers will restrict who is eligible for an HO-5 policy, so you should check in with your agent to see if it could work for you. 

Key takeaways:

An HO-5 policy provides the most thorough coverage for the contents of your home. A few main points to keep in mind when considering an HO-5 policy:

  • HO-5 policies protect your personal property against open perils, so you’ll be covered for any damage not specifically stated as an exclusion.
  • HO-5 policies reimburse you for damaged property at the full replacement cost rather than the actual cash value.

Understanding your HO-5 insurance policy

An HO-5 policy will provide the most comprehensive coverage you can get for your home. With this policy, you can rest assured that almost everything on your property will be covered in most situations. As opposed to an HO-3 policy — the most common type of home insurance — an HO-5 policy is more thorough and provides more premium coverage. 

What is the difference between HO-3 and HO-5? 

The short answer: An HO-5 policy is more comprehensive than an HO-3 policy when it comes to personal property coverage. 

An HO-3 policy will only cover personal property for named perils, while an HO-5 provides open peril coverage for personal property. This means that an HO-5 policy will cover damage to your personal property in all cases except for those specifically named in your policy, while an HO-3 policy only lists certain perils that are covered. 

An HO-5 policy will also replace your damaged property at its full replacement cost rather than at actual cash value. This means you’ll likely get a bigger payout for any damage to your property or the contents of your home. 

Understanding your HO-5 coverage

HO-5 policies include many of the same coverages as a typical home insurance policy. This means that an HO-5 policy protects:

  • Dwelling: Your home’s structure, foundation, and roof
  • Other structures: Any other structure on your property that isn’t connected to your dwelling
  • Personal property: The contents of your home and property
  • Liability: Any medical expenses for guests injured on your property or that you cause off of your property 
  • Loss of use: Any expenses incurred while you cannot reside in your dwelling for a covered reason 


Because HO-5 policies are open peril policies, you’ll also be covered when a disaster strikes. HO-5 policies also extend this open peril coverage to personal property as well as your dwelling. 

HO-5 and replacement cost

An HO-5 policy will cover your personal property at full replacement cost, which means you’ll get enough money to purchase a brand-new item. Other policies, like an HO-3 policy, will cover your contents for actual cash value, meaning you’ll get the amount the item is worth when depreciation is taken into account. 

Think of it this way: Replacement cost will equate to the amount you would pay for your item when it is brand-new, while actual cash value is how much you’d pay for it if you were buying it used or secondhand. 

Open perils and exclusions in an HO-5 insurance policy

HO-5 policies are open peril policies, which means your home’s contents will be covered for all perils except those explicitly stated as exclusions. 

A few common exclusions to an open peril policy may include:

  • Rust
  • Fungus 
  • Power failure
  • Sewer backups
  • Neglect
  • War
  • Damage from pets
  • Vandalism 


If these perils were explicitly named as exclusions on your policy, you’d have to foot the bill. But if not, your HO-5 policy would take care of it. 

Why choose an HO-5 insurance policy

An HO-5 policy can give you peace of mind. It provides the most thorough, comprehensive coverage, and is a good choice for people with families or lots of valuable items. With an HO-5 policy, you’ll usually be able to fully repair your home and fully replace any of your home’s contents that are damaged. 

How much does HO-5 cost?

The average premium for HO-5 insurance is about $1,412 per year, or $118 per month. Meanwhile, the average premium for an HO-3 policy is about $1,272 per year, or $106 per month. That means you’ll only pay about $12 more per month for more comprehensive coverage if you opt for an HO-5 policy rather than an HO-3. 

If you want to discuss your eligibility for HO-5 and get started with home insurance, contact Hippo to get a home insurance quote in under 60 seconds.

Still have questions?

Have more questions about an HO-5 policy? We have answers. 

What is a named peril policy?

A named peril policy means that you'll only be covered against disasters that are specifically stated in your policy, and not against any others. Usually, named peril policies provide a robust list of perils — including hail, smoke, or theft — but they won’t cover other, unexpected damage. 

What does HO-5 cover?

An HO-5 policy covers the same basic things that any home insurance policy does — including dwelling, personal property, and liability. An HO-5 policy includes the added benefit of being more comprehensive in its personal property coverage. With this policy, your dwelling and personal property will be covered against all perils except those specifically named as exclusions. 

What is full replacement cost?

Replacement cost is the amount of money it would take to replace your property or your home with the exact same thing in today’s market. This means that you’ll get enough money to replace your property or your home with items or materials of the same quality, without any consideration for depreciation. 

What is the 80% rule in insurance?

The 80% rule means that you’re required to purchase replacement cost coverage that is worth at least 80% of your home’s value in order to receive the full coverage in the event of any damage. For example, if you bought your home for $350,000, you’d need to purchase at least $280,000 in replacement cost coverage in order to receive it.


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