Main/Knoxville:  (865) 588-7000
Nashville:  (615) 557-4296
(800) 588-7001



Comparing the Two Policies

Coverage: While the two policy types offer identical coverage for dwellings, the HO-5 policy is clearly superior in terms of personal property coverage.

Availability: Most homeowners will choose the HO-3
policy as it is available everywhere. The HO-5 policy is not available in all areas, and in some cases may only be offered for homeowners of newer, well-maintained homes.

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.

Which Policy is Right for You?


HO-3 Policies
An HO-3 homeowners policy is a hybrid “open perils” and “named perils” policy—that is, your home is covered on an open perils basis and your contents—personal property, or everything that would fall out if you flipped the house over and shook it—are covered on a named perils basis.

There are generally 16 named perils for an 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. Damage Caused by Aircraft

 

11. Riots

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

HO-5 Policies

An HO-5 policy is a complete open perils policy—both your dwelling and personal property are covered on an open perils basis. Therefore, an HO-5 policy gives the insured a list of exclusions under which the dwelling and personal property are not covered.

Listed exclusions in an open perils policy usually 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 Versus Named Perils

An open perils policy offers you coverage against just about any type of dwelling damage you can think of, except for certain exclusions. The policy does not list what perils your home and/or personal property is covered from—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.

Replacement Cost or Actual Cash Value?

Homeowners insurance policies offer actual cash value or replacement cost coverage to replace damaged, stolen or destroyed personal property:
•  Replacement cost is what you would pay for the item at today’s cost.

Actual cash value
is what you would pay for the item at its current worth—replacement cost minus depreciation.
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This website is intended to stimulate dialogue about your protection and does not alter or interpret your insurance policies. Always refer to your policy for details about your coverage.