HO‑3 versus HO‑5, and what the open perils difference pays

Homeowners policies in the United States are sold as standardised forms with numbers. Most households are written on an HO-3. The upgrade is an HO-5, and the difference is one word applied in one extra place.

Open perils and named perils

An open perils basis covers any cause of loss except the ones the policy specifically excludes. A named perils basis covers only the causes of loss printed in a list, typically sixteen of them. The practical consequence is the burden of proof. On open perils, we have to show your loss was excluded. On named perils, you have to show it was listed.

The claims where it matters

A tree through the roof is covered on both forms: falling objects is a named peril and it is not an HO-3 exclusion. The gap opens on the ordinary domestic accidents that do not appear on any list. A can of wood stain tipped across a rug. A laptop dropped down a stairwell. A ring lost in the yard rather than stolen from the house.

None of those are named perils, so an HO-3 declines them and an HO-5 pays them subject to the deductible. That is the whole difference, and for most households it costs a modest percentage on the premium.

The renters and condo equivalents

• HO-4 is the renters form. Contents and liability, no structure.
• HO-6 is the condo form. Walls-in building property, contents, liability and loss assessment.
• Both can usually be endorsed up to an open perils contents basis for a small premium.

Ask which form number is on your declarations page before you ask what the premium is. The form decides what gets paid; the premium only decides what it cost you to find out.