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Chicago Homeowners Insurance: HO-3 & HO-5 Coverage

Single-family home in Chicago suburbs
Single-Family Home Protection

Standard Homeowners Insurance Coverage

Protecting your single-family home with robust Dwelling, Liability, and Property coverage tailored for Chicago homeowners.

Chicago Home Ownership Protection

Managing Chicago Home Risks

Chicago homeowners face unique challenges—from severe winter storms and hail damage to urban theft and liability concerns. Your single-family home is likely your largest investment, and MC Chicago Insurance understands these neighborhood-specific risks.

We compare top-rated carriers to ensure your dwelling coverage keeps pace with rising construction costs and property values throughout the Chicagoland area.

6 Core Coverages of Your Home Policy

  • Dwelling (Coverage A)
  • Other Structures (Coverage B)
  • Personal Property (Coverage C)
  • Loss of Use (Coverage D)
  • Personal Liability (Coverage E)
  • Medical Payments (Coverage F)
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HO-3 vs. HO-5 Explained

HO-3 (Standard Form)

The HO-3 covers your dwelling structure against all perils except those specifically excluded (like flood and earthquake). However, your personal belongings are only covered for 16 named perils such as fire, theft, and windstorm. This is the most common policy for single-family homes.

HO-5 (Comprehensive Form)

The HO-5 provides "Open Perils" coverage for both your dwelling AND personal property. This means everything is covered unless specifically excluded. Ideal for high-value homes and those with expensive belongings who want maximum protection.

Valuation Methods

Replacement Cost pays to rebuild or replace items at today's prices without depreciation. Actual Cash Value deducts depreciation, leaving you with less. We recommend replacement cost coverage to ensure you can fully rebuild after a Chicago storm or fire.

Dwelling & Structure Coverage

Chicago single-family home exterior

Coverage A: Your Home's Structure

Dwelling coverage (Coverage A) protects the physical structure of your home—walls, roof, foundation, built-in appliances, and attached structures like your garage. If a fire, windstorm, or falling tree damages your Chicago home, this coverage pays to repair or rebuild.

Dwelling (Coverage A)
Main structure, roof, walls, foundation, and attached garage.
Other Structures (Coverage B)
Detached garage, fence, shed, or pool house (typically 10% of Coverage A).
Fire & Smoke
Full protection for fire damage including smoke remediation.
Wind & Hail
Critical for Chicago's severe storms and roof damage claims.

Protecting Your Belongings

Coverage C: Personal Property

Personal property coverage protects your belongings—furniture, electronics, clothing, and appliances—whether they're damaged at home or anywhere in the world. Standard limits are typically 50-70% of your dwelling coverage, but high-value items may need additional protection.

What's Protected

  • Electronics: TVs, computers, gaming systems, and smart home devices.
  • Furniture: Sofas, beds, dining sets, and outdoor furniture.
  • Clothing & Personal Items: Wardrobes, shoes, and personal accessories.
  • Appliances: Refrigerators, washers, dryers, and kitchen equipment.

Home Inventory Tips

Document Everything: Take photos or videos of each room, including closets and storage areas. Keep receipts for major purchases in a safe location or cloud storage.

Special Limits Apply: Jewelry, art, firearms, and collectibles have sub-limits (often $1,500-$2,500). Schedule these items separately for full protection.

Update Annually: Review your inventory each year and after major purchases to ensure adequate coverage.

Critical Chicago Endorsements

Essential Add-Ons

  • Water Backup & Sump Overflow
  • Service Line Coverage
  • Ordinance or Law Coverage
  • Scheduled Personal Property

Why These Matter in Chicago

Water Backup: Protects your basement when sewers overflow during heavy Chicago storms—a claim we see frequently.

Service Line: Covers underground pipes and utility lines from your home to the street, which age and fail.

Ordinance or Law: Pays for code upgrades required when rebuilding older Chicago homes to current standards.

What's Excluded from Your Policy

Standard Policy Exclusions

Standard HO-3 and HO-5 policies exclude several significant perils. Understanding these gaps is critical for Chicago homeowners. Flood damage, earth movement, and sewer backup require separate coverage or endorsements to protect your home.

Flood Damage Sewer Backup Earth Movement Gradual Damage

Coverage Solutions

  • Flood Insurance via NFIP or private carriers
  • Water backup endorsement for sewer/drain
  • Equipment breakdown coverage
  • Foundation coverage for settling/cracking

Umbrella Insurance

Extra Liability

Coverage starting at $1M beyond your standard home/auto limits.

How It Works

It kicks in when underlying policy limits are exhausted by a lawsuit.

Who Needs It?

Homeowners with assets, pools, dogs, or teen drivers should have it.

Common Questions

HO-3 (Standard) covers your dwelling against all perils except those specifically excluded, but your belongings are only covered for 16 named perils. HO-5 (Comprehensive) provides "open perils" coverage for both your home AND belongings, meaning everything is covered unless specifically excluded. HO-5 offers broader protection and is ideal for higher-value homes.

It depends on the cause. Sudden damage from a covered peril like wind, hail, or a fallen tree is covered. However, leaks caused by age, wear and tear, or lack of maintenance are excluded. In Chicago, where severe storms are common, we recommend annual roof inspections to maintain coverage eligibility.

Market value is what your home would sell for, including land value and location factors. Replacement cost is what it would cost to rebuild your home's structure with similar materials at current prices. Your dwelling coverage should be based on replacement cost, not market value, to ensure you can fully rebuild after a total loss.

No, sewer and drain backup is excluded from standard HO-3 and HO-5 policies. This is one of the most common claims in Chicago due to aging infrastructure and heavy rainfall. We strongly recommend adding a water backup endorsement, which typically costs $50-$150 annually and provides $10,000-$25,000 in coverage.

Your dwelling coverage should equal 100% of the cost to rebuild your home at current construction prices—not your purchase price or mortgage balance. In Chicago, construction costs have risen significantly, so we conduct annual reviews to ensure your limits keep pace. Underinsuring can result in coinsurance penalties at claim time.

Coinsurance requires you to insure your home for at least 80% of its replacement cost. If you're underinsured, claims payments are reduced proportionally. For example, if your home costs $400,000 to rebuild but you only carry $300,000 in coverage, you may only receive 75% of a partial loss claim. We help ensure you meet coinsurance requirements.

Standard policies have sub-limits for jewelry (typically $1,500), firearms, silverware, and collectibles. To fully protect high-value items, you need a scheduled personal property endorsement or "floater" that lists each item with its appraised value. This also provides broader coverage, including accidental loss.

Yes, Coverage B (Other Structures) covers detached garages, fences, sheds, and other structures on your property. This coverage is typically set at 10% of your dwelling coverage. If you have significant outbuildings, you may need to increase this limit.

When rebuilding after a covered loss, you may be required to bring your home up to current building codes. Standard policies only pay to rebuild to the original condition. Ordinance or Law coverage pays for the additional cost of code upgrades—essential for older Chicago homes that may need updated electrical, plumbing, or structural work.

Bundle home and auto policies for multi-policy discounts, raise your deductible, install security systems and smoke detectors, update electrical and plumbing, maintain a claims-free history, and improve your credit score. As an independent agency, we shop 20+ carriers to find the best combination of coverage and price for your specific home.

Protect Your Chicago Home Today

We compare HO-3 and HO-5 rates from 20+ A-rated carriers to find your best coverage and value.

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