Coverage: While the two policy types offer identical coverage for dwellings, the HO-5 policy is
clearly superior in terms of personal property coverage.
Price: In most cases, the HO-3 policy is cheaper as the coverage is not quite as comprehensive as the HO-5.
Claims process: A big difference between the two policies is how the claims process is handled. In an
open claims process, the burden is on the insurance company to prove that damage sustained was caused
by something on the exclusion list. In an HO-3 policy, the burden is on the homeowner to prove that the
damage was caused by a named peril.
What Protection Does an HO-3 Policy Offer?
An HO-3 homeowners policy is by far the most common homeowners policy found in the United States.
The HO-3 is a hybrid “open perils” and “named perils” policy—that is, your home is covered on an open
perils basis and your contents are covered on a named perils basis. There are generally 16 named perils
for a HO-3 policy:
1. Theft
2. Fire or Lightning
3. Smoke
4. Smoke
5. Freezing
6. Vehicles
7. Falling Vehicles
8. Volcanic Eruption
9. Windstorm or Hail
10. Riots
11. Damage Caused by Aircraft
12. Vandalism
13. Damage due to weight of ice, snow or sleet
14. Sudden and accidental
tearing apart, burning or bulging
15. Sudden and accidental damage from an artificially generated electric current
16. Accidental discharge or overflow of water from plumbing or air conditioning
What Protection Does an HO-5 Policy Offer?
An HO-5 policy is a complete open perils policy—both your dwelling and personal property are covered
on an open perils basis. The same exclusions apply for the dwelling in an HO-3 policy and also
include the following:
1. Earth movement
2. Ordinance or law
3. Water damage
4. Power failure
5. Neglect
6. War
7. Nuclear hazard
8. Intentional loss
9. Government action
10. Collapse
11. Theft to a dwelling under construction
12. Vandalism
13. Mold, fungus or wet rot
14. Wear and tear
15. Mechanical breakdown
16. Smog, rust and corrosion
17. Smoke from agricultural smudging
18. Discharge of pollutants
19. Settling, shrinking, expanding
20. Birds, vermin, rodents
21. Animals owned by insured
Open vs Named Perils
An open perils policy offers you coverage against just about any type of damage you can think of, except
for certain exclusions. The policy does not list what perils your home and/or personal property is covered f
rom—rather, it only lists what perils are excluded. If damage to the home is not caused by something listed
on the exclusion list, you are covered.
A named perils policy specifically lists the perils for which your home and/or personal property is covered,
instead of a list of exclusions. If your home or personal property is damaged by something not on the
named perils list, you are not covered.
