What is the difference between an HO-3 and an HO-5 policy? They’re the same but one is newer. The HO–3 policy does not include liability. The HO-3 uses replacement cost reimbursement for dwelling an actual cash value for personal property while the HO-5 uses replacement cost for dwelling in for personal property. And HO-5 does not include coverage for the dwelling.
The statement provided contains incorrect information. Here is the correct comparison:
1. HO-3 Policy: This is a commonly used homeowners insurance policy. It provides coverage for both the dwelling and personal property on an "open-perils" basis, which means it covers all risks except those specifically excluded in the policy. It typically reimburses the cost of repairs or rebuilding the dwelling on a replacement cost basis, and personal property is usually reimbursed on an actual cash value basis. Liability coverage is included in an HO-3 policy.
2. HO-5 Policy: The HO-5 policy is a more comprehensive and newer form of homeowners insurance. It also provides coverage for both the dwelling and personal property on an "open-perils" basis. However, the HO-5 policy typically offers replacement cost coverage for both the dwelling and personal property, providing more extensive coverage than the HO-3 policy. Liability coverage is also included in an HO-5 policy.
In summary, the main differences between an HO-3 and HO-5 policy are the extent of coverage for the dwelling and personal property. The HO-5 policy generally offers broader coverage with replacement cost reimbursement for both the dwelling and personal property, while the HO-3 policy typically provides replacement cost for the dwelling and actual cash value for personal property.