When you shop for homeowners insurance you’ll mostly see HO-3 and HO-5 policies. They look similar but differ in one important way that affects both your protection and your premium.
Same six coverages, one big difference
Both policies include the same six HO-3 coverages: dwelling, other structures, personal property, loss of use, liability and medical payments. Both cover the structure on an open-perils basis (everything except named exclusions like flood and earthquake).
The difference is personal property:
| Feature | HO-3 | HO-5 |
|---|---|---|
| Dwelling coverage | Open perils | Open perils |
| Personal property | Named perils | Open perils |
| Typical settlement on belongings | Often actual cash value (RCV optional) | Usually replacement cost |
| Sub-limits (jewelry, electronics) | Standard | Often higher |
| Price | Lower (baseline) | Higher |
| Availability | Very wide | Newer/lower-risk homes |
What “named perils” vs “open perils” means
Under HO-3, your belongings are only covered if the loss comes from a listed peril (fire, theft, windstorm, etc.). Under HO-5, your belongings are covered for any cause that isn’t specifically excluded — so the burden shifts to the insurer to prove an exclusion, which means fewer claim disputes.
Which should you choose?
- HO-3 is the standard and covers about 79% of owner-occupied policies. For most homeowners it’s sufficient and cheaper.
- HO-5 makes sense if you own valuable belongings, want the broadest protection, and your home qualifies. It costs more and isn’t offered for every property.
- Either way, set your dwelling coverage to replacement cost and consider adding the gaps HO-3 and HO-5 both exclude — flood and earthquake.
Compare your state’s average premium and estimate a ballpark with the premium estimator before you decide.
General information, not advice or a quote. Policy forms, settlement basis and availability vary by insurer and state. Read your own policy and confirm with a licensed insurer.