If you decide that you want the best of the best to make sure that your house and all your belonging are protected no matter, you want to invest in an HO-5 form policy. This is one of the best options available as far as home insurance goes. Not only does it contain special coverage for your building but it also contains special coverage for your personal contents. This means that unless something happens that is specifically listed as an exclusion, you are covered under your insurance up to your policy limit. This is also referred to as an ‘open perils’ policy because you are covered under many different circumstances. If you are certain that you want this type of insurance policy, be sure to mention ‘open perils’ to your insurance agent. Not all states abide by the HO-5 classification and you don’t want to end up with the wrong policy.
This biggest difference between an HO-5 policy and an HO-3 policy, which is the next best option for homeowners, is that your personal property is subject to only the exclusions lists. Normally, on an HO-3 policy, any peril that causes damage to your personal property must be covered. That means that the responsibility of proving that your damage should be covered falls on your and sometimes that may not be easy if you don’t necessarily understand the insurance lingo in your policy. What an HO-5 form does is take that worry away. As long as you know what your exclusions are and what they mean, everything else is a covered. When it comes to your house, it’s where you spend the majority of your free time, indulge in hobbies, and build a life for yourself. Because of how personal it is, the extent of accidents and their cause is unfathomable. There are some things that insurance companies just won’t cover though. These specific exclusions for an HO-5 policy are listed below.
HO5-Home Insurance Coverage and Exclusions for your Dwelling and Personal Property:
- Earth Movement
- Ordinance or law
- Water damage
- Power failure
- Nuclear hazard
- Intentional loss
- Government action
- Theft to a house under construction
- Vandalism or malicious mischief if your house is vacant for more than 60 days
- Mold, fungus, rot
- Wear & tear, Deterioration
- Mechanical breakdown
- Smog, rust, corrosion
- Smoke from agricultural smudging and industry operations
- Discharge, dispersal, seepage of pollutants
- Settling, shrinking, bulging, expanding
- Birds, vermin, rodents, insects
- Animals owned by you
While this may seem like an extensive list, when you think of all the more realistic things that can happen to your home, it’s really not that bad. There are other perks that come with this premium policy as well.
As always, make sure that you are insuring your house and your belonging for the replacement value. This will require you take some time to inventory your belongings but having an accurate list is necessary to determine the right coverage limits. With an HO-5 policy, your limits can be higher for your replacement costs and it can also include specific coverage for things like fine jewelry and priceless art. Since this is a premium policy, insurers are working on the basis that the kind of homeowner that purchases this policy has many things worth insuring.
What an HO-5 Policy Lacks
This is a premium insurance product and worth an investment but just like anything, it has its limits. In addition to the exclusions list, an HO-5 policy also doesn’t cover flood damage. You will be hard pressed to find a policy that will. It may cover some water damage but if a river overflows its banks, you better have a form of flood insurance. This is offered the National Flood Insurance Program and while you may think you don’t live in a high risk area, you never know when heavy rains can hit. If you have an HO-5 policy but no flood insurance and a freak storm creates a river in the middle of town, you might as well have no insurance at all. Your personal property wouldn’t be covered either.
This is a wonderful policy for anyone who wants to make sure that their house and belongings are protected under almost any circumstance but don’t let that lull you into a sense of false security. Invest in flood insurance and be sure to follow normal safety measures around your house. Just because you have insurance doesn’t mean you want to constantly tap into it as that could result in higher premiums.