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Do you have an HO-3 or an HO-5 policy?  This is an important question to consider when getting quotes to cover your home!  Many people presume that all insurance policies are created equal and that is not always true.  Commonly many homeowners naturally assume that if the standard coverage limits match, then the quote is “apples to apples”.  However, quotes can vary substantially depending on whether coverage is under an HO-3 or HO-5.  So, what are the differences exactly?  Let us discuss…

 

The HO-3 is generally minimal coverage, just enough to satisfy a mortgage with most other additional coverages being optional.  HO-3 provides coverage for contents on a named peril basis: meaning, that you are insured against a list of specific causes of loss.  Below are a few examples:

  • Theft
  • Fire or Lightning
  • Explosion
  • Smoke
  • Freezing
  • Falling Objects
  • Windstorm and Hail

An HO-5 does not have the same limitations of an HO-3.  The HO-5 provides many built-in coverages that the HO-3 does not, for instance the HO-5 automatically provides replacement cost on contents, under an HO-3 replacement coverage is available but not automatically included.  Additionally, HO-5 is not done on a named peril basis.  Unless it is specifically excluded, it is covered.  That means, that you do not have to prove your loss occurred due to a specific named peril, which can eliminate a lot of time and frustration during the claims process

 

When choosing a carrier keep in mind that less is not always better.  Confirm that the other coverages, not just your dwelling and other structures are equivalent as well.   You never want to save premium by sacrificing coverage.  When shopping around have your current policy in hand, and request a copy of the new quote to pick out the differences, and ask each agent to verify if the policy is an HO-3 or an HO-5 so that you know if a claim occurs you have the best coverage available.  

Do your research, ask questions and make sure that your home is covered adequately!  

 

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