H03 Vs H05

Discussion in 'P&C Insurance Forum' started by InsuranceRus, Jan 29, 2009.

  1. InsuranceRus
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    I am a new agent and I am confused about the differences between an H05 and an H03 and if the H05 is worth the extra money. All replies will be greatly appreciated.
     
  2. bobson
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    Like all insurance, we'll let you know after the claim is filed. An HO5 essentially covers the personal property the exact same way it covers the home structure itself. There is coverage for anything that could possibly happen....except for what is excluded in the policy.

    In an H03 the personal property is covered for only 16 perils (which are listed in thepolicy). If anything else happens to the property there is no coverage.

    I'd haphazard a guess that 95% (probably more or maybe less) of the claims that happen to personal property happen because one of the 16 perils listed in an HO3

    That being said we generally write HO3s. My house is insured with an HO3.

    With an HO3 the insured has to prove that the damage to his or her personal property was caused by one of the 16 perils. In an HO5 the personal property is covered unless the company can prove it was damaged by one of the exclusions.
     
  3. InsuranceRus
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    Thanks, that helps a lot.
     
  4. djs
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    HO3 is a named perils policy for personal property, HO5 is an all perils (minus exclusions) for personal property.

    The other difference that isn't really part of the H03 vs H05 policy, but is frequently included is how they pay for the personal property. I believe most H05 policies default to replacement cost coverage (usually provided by endorsement) where most HO3 policies may have personal property at cash value by default and you have to endorse on replacement cost coverage.

    The reason I mention this is when you are looking at pricing, the way the personal property is adjusted is usually the biggest part of the cost difference between the 2. Different carriers in different areas may do things differently, so be careful to look at this.

    Personally, I never sell a homeowners policy without full replacement cost coverage for their personal property. I don't know about anyone else, but I want to buy new underwear, not used stuff from a garage sale.

    Dan
     
  5. warrenins
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    I think DJS is right on. I wouldn't dream of selling a Homeowners without replacement cost on the contents. The homeowner who bought the big screen HD tv last year and then the house burns down, is not going to be happy when the adjuster depreciates it to pay cash value or the wife who is told her three year old bedroom set bought for $8,000 is only going to be paid at $6200 or maybe less. In some circumstances you can't get replacement costs, but if it is available and you don't add it you might be notifying your E&O carrier of a potential claim that is about to take place.
     
  6. Soaringagent
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    Great thread... what carriers do you usually sell HO5's?
     
  7. PotentialFarmer
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    I think HO5 is a bit excessive. Although for the very rich or the people who need that security to sleep it could be a better way to go.
     
  8. djs
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    Talk to a few people who have had claims before you ever say something is excessive. Once you have held a few peoples hands through claims, you'll probably take back this statement.

    Dan
     
  9. Gulliver
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    Soaring Agent,

    All of the big name carriers offer the H5 as their go to policy.

    State Farm
    Liberty Mutual
    Travelers
    Hartford
    Met Life

    Gulliver
     
  10. bobson
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    I write with 3 of them. And their go to policy at least in my state is not an HO5.
     

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