In a HO-5 policy, how are the perils for both building and contents covered?

In an HO-5 policy, both the building (dwelling) and contents (personal property) are covered on an open perils basis. This means that the policy provides coverage for all risks of physical loss or damage to the property, except for those specifically excluded in the policy. This type of coverage offers broader protection compared to named perils, which only covers losses that are explicitly listed.

The open perils approach is particularly advantageous because it places the responsibility on the insurer to prove that a loss is excluded, rather than on the policyholder to prove that a loss is covered. This can lead to more comprehensive protection for homeowners, as they have greater peace of mind knowing that their property is protected against a wide range of potential hazards.

Understanding the difference between open and named perils is crucial for policyholders when choosing insurance coverage, as it significantly affects the scope of protection offered.