For homeowners who want basic protection, an H03 policy will suffice. But for homeowners looking for the most protection and the highest coverage limits, a premium H05 policy is the best bet.

With most home insurance, such as an H03 policy, you are required to prove that your personal property claim happened due to one of the named perils (insurance-speak for specific dangers) listed on your policy. However, with a premium policy, such as an H05, the onus is on the insurance company. The only way you won't get reimbursed for personal property damages is if the peril is specifically exempted from your policy.

KEY TAKEAWAYS

• The difference between the H03 policy and the H05 policy for homeowners is what perils or dangers to your home are covered.
• A basic H03 policy covers all risks to the building structure, including the outside of the building; personal property, including everything in your home, is only covered if it falls under the policy's named perils.
• With a premium H05 policy, all risks to the building structure and personal property are covered, but all personal property, or everything in your home—unless it falls under the list of perils that are specifically excluded.
• H03 policies are less costly than H05 policies because they cover less, and put the burden of proof of a claim on the homeowner.
• For most homeowners, H03 policies are sufficient. HO5 policies benefit those with a lot of high-value belongings and expensive personal property.

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Basic H03 Policy vs. Premium HO5 Policy

The most common sort of homeowners insurance, an HO3 policy, regards all risk to the actual building structure of your home, meaning you'd be insured for any peril that could happen to the outside of your home.

Peril, in terms of insurance coverage, is defined as something that could destroy or cause damage to your property. A burst pipe, fire, hurricanes, or tornadoes are all perils.

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