An HO-2 policy, also known as a “broad type” of homeowners insurance, is available from some insurance companies. However, HO-2 policies provide less coverage than the more popular HO-3 policy. To make the best insurance decision, it is important to understand what HO-2 policies cover and don’t cover.
What is HO-2 Insurance?
In general, insurance companies offer eight types of coverage that are also known as “policy forms” for homeowners, condo owners, and renters. Some are specific to your home type. For example, an HO-4 policy is only for renters. HO-6 policies are designed for condo owners. HO-7 insurance protects those who own mobile or manufactured homes.
There are many homeowners policies available for those who own traditional homes. An HO-1 policy offers the most protections. The HO-5 policy offers the best protection from all coverage types.
Although HO-2 policies offer a higher level of coverage than HO-1 policies they are not as comprehensive as an HO-3 which is most common homeowners insurance policy.
HO-2 insurance, like other home insurance policies, is composed of a few basic coverage elements, including:
- Coverage for your home and its contents
- Coverage for other structures, such as sheds and fences
- Personal property coverage for clothes, furniture, and electronics
- In some cases, liability coverage is available to protect you if someone injures or damages your property.
- Additional living expenses coverage provides protection in the event that your home becomes unlivable because of a covered loss
Named perils vs. open perils
Home insurance policies cover the various components either on an open or named perils basis. A named perils policy covers only those perils that are specifically listed in the policy, such as wind or fire. An open perils policy covers you against all loss, unless it is specifically excluded.
An HO-2 policy provides homeowners with insurance coverage for named perils. Your policy will only pay for damage that results from a peril specifically mentioned in the policy. It is unlikely that your policy will cover damage to your home caused by an occurrence not listed.
HO-2 vs. HO-3 policies
You should be able to distinguish between HO-2 and HO-3 policies. This will help you choose the right homeowners insurance policy. Below is a table that shows how HO-2 and HO-3 policies respond to losses.
| Type of HO-2 coverage | Type of coverage: HO-3 | |
|---|---|---|
| Living in a House | Named perils | Open perils |
| Other structures | Named perils | Open perils |
| Contents | Named perils | Named perils |
HO-2 coverage
You may now be curious about the specific losses covered by an HO-2 policy.
What are the HO-2 policies?
An HO-2 policy names 16 perils. These are:
- Lightning and fire
- Hailstorms and windstorms
- Explosions
- Riots and civil commotion
- Aircraft damage
- Vehicles can cause damage
- Smoke
- Vandalism
- Theft
- Volcanic eruption
- Falling objects
- The weight of snow, ice or sleet can cause damage
- Accidental discharge of steam or water from a household appliance, plumbing, heating, air conditioner, or sprinkler system
- A sudden and accidental disintegration, cracking or burning of a steam or water heating system, sprinkler system or air conditioner.
- Frozen of household appliances, plumbing, heating, air conditioner, sprinkler system or plumbing
- An artificially generated electric current can cause sudden and accidental damage.
What are the exclusions from HO-2 policies?
Flood and earthquake coverage are not covered by HO-2 insurance, as with most home policies. There are also some things you may not be covered for:
- Water damage due to drain or sewer backups
- Nuclear accidents
- War
- Landslides, and Mudslides
- Sinkholes
- Mold
- Pests such as termites or rodents
- Power failure
- Neglecting to maintain your property can cause damage.
Many homeowners insurance providers allow you to add riders to your policy to increase coverage, also known as endorsements. For example, you might be able add a rider that covers mold damage and sewer backup damage.
Questions frequently asked
Where can I purchase HO-2 insurance
While some home insurance companies offer HO-2 insurance policies, others have begun to limit their availability of these policies to HO-3 policies. You can get quotes from several home insurance providers if you’re looking for an HO-2 plan or wish to compare policies.
What is the cost of an HO-2 insurance policy?
As with all home insurance policies the amount of HO-2 insurance you pay will depend on your home, your location, and the likelihood of natural disasters in your area.
It is a good idea to get quotes from multiple companies to help you find the right policy for your budget. Compare your quotes to the average cost of home insurance in your area to determine if the policy is right for you.
What type of homeowners insurance should you get?
Policies with lower coverages, such as HO-1 or HO-2 insurance, are generally cheaper than those with greater coverages. While you may be able to pay less, you are also more likely to experience loss.
Talking to an insurance professional is a good idea if you’re not sure what coverage you need. An agent can help you assess your needs and guide you in choosing the right policy to protect your unique situation.
