HO-2 insurance

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An HO-2 policy is a type of homeowners insurance and is also called a “broad form.” Although it is less popular than other policies types, some home insurance companies do sell HO-2 insurance. However, HO-2 policies offer less coverage than the more common HO-3 policy. It is important to know what HO-2 policies do and do not cover in order to make the best decision for your insurance needs.

What is HO-2 insurance?

Generally, insurers offer eight different types of coverage, also called “policy forms,” for homeowners, condo owners and renters. Some are specific to the type of home in which you live. An HO-4 policy, for example, is designed just for renters, while HO-6 policies are for condo owners and HO-7 insurance is designed to protect those who own mobile and manufactured homes.

If you own a traditional home, there are several homeowners policy options. You can choose an HO-1 policy, which offers the fewest number of protections. On the other end of the spectrum is the HO-5 policy, which gives you the most robust protection of the various coverage forms.

HO-2 policies are a step up from HO-1 policies, but they do not offer as much coverage as an HO-3, which is the most common type of homeowners insurance policy.

Like other home insurance policies, HO-2 insurance is comprised of a few basic coverage components, including:

  • Dwelling coverage, for the home itself
  • Other structures coverage, for detached structures like sheds or fences
  • Personal property coverage, for your belongings, such as clothes, furniture and electronics
  • Liability coverage, in some cases, for protection if you are found at fault for injuries or damage to someone’s belongings that occurs on your property
  • Additional living expenses coverage, which provides coverage in case your home is not liveable due to a covered loss

Named perils vs open perils

The various components of home insurance policies are covered either on a named perils basis or an open perils basis. In general, a named perils policy will cover only the specifically named perils, such as fire or wind, listed in the policy. An open perils policy protects you against any loss unless it is explicitly listed as an exclusion.

An HO-2 insurance policy covers homeowners on a named perils basis. This means that your policy will only cover damage caused by a peril that is specifically listed in the policy. If your home is damaged by an occurrence that is not specifically listed, it will likely not be covered.

HO-2 vs. HO-3 policies

Before choosing a homeowners insurance policy, you should understand the difference between how an HO-2 policy and an HO-3 policy covers your home and personal belongings. Below is a table showing how HO-2 policies and HO-3 policies react to losses.

HO-2 coverage type HO-3 coverage type
Dwelling Named perils Open perils
Other structures Named perils Open perils
Contents Named perils Named perils

HO-2 coverages

Now that you know that an HO-2 policy only covers specifically named losses, you may be wondering what those losses are.

What do HO-2 policies cover?

An HO-2 policy lists 16 named perils. They are:

  • Fire and lightning
  • Windstorm and hail
  • Explosions
  • Riot and civil commotion
  • Damage caused by aircraft
  • Damage caused by vehicles
  • Smoke
  • Vandalism
  • Theft
  • Volcanic eruption
  • Falling objects
  • Damage caused by the weight of ice, snow or sleet
  • The accidental discharge of water or steam from a household appliance or a plumbing, heating, air conditioning or sprinkler system
  • The sudden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system, air conditioner or sprinkler system
  • The freezing of a household appliance or plumbing, heating, air conditioner or sprinkler system
  • The sudden and accidental damage from an artificially generated electrical current

What do HO-2 policies exclude?

Like most home policies, HO-2 insurance typically does not cover flood and earthquake coverage. You may also not be insured for:

  • Water damage caused by sewer or drain backups
  • Nuclear accidents
  • War
  • Mudslides and landslides
  • Sinkholes
  • Mold
  • Pests like rodents or termites
  • Power failure
  • Damage as a result of neglected maintenance

Some homeowners insurance providers offer the ability to add optional coverages to your policy with riders, also called endorsements. You might be able to add a rider to cover mold damage or sewer backup damage, for example.

Frequently asked questions

Where can I buy HO-2 insurance?

Some home insurance providers offer HO-2 insurance, although other companies have started limiting their issuance of these policies in favor of HO-3 policies. If you are looking for an HO-2 policy or want to compare policy options, you can start by getting quotes from multiple home insurance providers.

How much does an HO-2 policy cost?

Like all home insurance policies, the amount you will pay for HO-2 insurance depends on the specific features of your house, where you live, how common natural disasters are in your area and more.

The best way to find a policy to fit your budget is to obtain quotes from several companies. Comparing your quotes with the average home insurance costs in your state may help you decide if a policy is the right fit for you.

Which type of homeowners insurance should I get?

Generally, policies with less protection — like HO-1 and HO-2 insurance — are cheaper than policies with more expansive coverages. You may pay less, but you will also be exposed to more risk.

If you are unsure how much coverage you need, talking to an insurance professional may be a good idea. An agent can help you evaluate your specific needs and guide you to a policy that best protects your unique situation.

Written by
Kacie Goff
Personal Finance Contributor
Kacie Goff is a personal finance and insurance writer with over seven years of experience covering personal and commercial coverage options. She writes for Bankrate, The Simple Dollar, NextAdvisor, Varo Money, Coverage, Best Credit Cards and more. She's covered a broad range of policy types — including less-talked-about coverages like wrap insurance and E&O — and she specializes in auto, homeowners and life insurance.
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