When you're ready to protect your home against numerous common and unexpected disasters, you have several options when it comes to coverage. An HO2 policy provides a lot of important protection for your home, belongings, and more. However, this type of policy isn't right for everyone.
Luckily, a local independent insurance agent can help you compare your homeowners insurance options and choose the right type of policy. They'll help you determine if HO2 insurance coverage would best meet your needs. But first, here's a closer look at HO2 home insurance and when it might be a good option.
HO2 Insurance Explained: What Is an HO2 Policy?
HO-2 homeowners insurance, also written as HO2 insurance, is a type of home insurance coverage that provides more protection than an HO-1, but less than an HO-3 policy. An HO2 insurance plan is also known as a “broad coverage” policy.
You may have asked, "Is an HO2 named peril coverage?" The answer is yes. With HO2 home insurance, your home is protected against 16 dangers, or named perils, that can damage your property. That’s six more perils than a basic HO-1 policy covers.
However, you can’t buy an HO2 policy for a property you rent. Additionally, an HO2 is also not designed for other types of property, such as condos or townhomes. Your local independent insurance agent can help you determine if an HO-2 policy is right for your property.
What Does HO2 Insurance Cover?
The HO2 covers your home and other structures, such as garages, fences, and sheds, from 16 specifically listed threats. Simply put, if your home is damaged or destroyed by a risk that’s not listed below, your claim will likely be denied by your carrier.
The following are the named perils covered by HO-2 insurance:
- Fire and lightning
- Explosions
- Smoke
- Hail and windstorms
- Malicious mischief and vandalism
- Theft
- Volcanic eruptions
- Falling objects and trees
- Freezing of household systems
- Weight of sleet, snow, and ice
- Accidental flooding from a stream or water
- Sudden and accidental tearing apart, burning, cracking, or bulging of household systems
- Sudden and accidental damage from artificially generated electrical current
- Riots and civil commotion
- Aircraft damage
- Vehicle damage
Since HO2 only pays for damage caused by one of these disasters, you'd likely be responsible for covering other damage or destruction to your home out of your own pocket. Your independent insurance agent can help you review your specific HO-2 policy to be certain of what's covered.
What Is Covered Under an HO2 Policy?
HO-2 policies provide the same basic coverage categories as HO-3 insurance, with the key difference being that HO-2 insurance only includes named peril coverage for the dwelling, additional structures, and personal property.
HO-3 insurance, on the other hand, provides open-peril coverage for the dwelling and other structures, but named peril coverage for contents or personal belongings. Open-peril coverage means that the policy will cover any disaster other than those specifically excluded in the policy.
HO-2 insurance includes these categories of coverage:
- Dwelling coverage: This coverage protects your home's structure, including the walls, roof, foundation, etc., against the perils listed in your policy.
- Other structures coverage: This coverage protects additional structures you've insured, such as fences, garages, and sheds, against the perils listed in your policy.
- Liability coverage: This coverage can reimburse you for expenses stemming from third-party claims of bodily injury or personal property damage, including lawsuit costs if you are sued.
- Contents coverage: This coverage can reimburse you for the cost of repairs or replacements to your personal property, such as clothing and furniture, if it's damaged, stolen, lost, or destroyed by one of the listed perils in your policy.
- Additional living expenses coverage: This coverage can pay for loss of use of your home or times in which you must temporarily live elsewhere while your property undergoes covered repairs. This coverage can pay for various costs, such as hotel rooms, takeout meals, additional gas mileage, and more.
While HO-2 insurance provides the same types of coverage as HO-3 policies, it doesn't include as much protection because coverage is highly limited to named perils, vs. open perils, in more of these categories. An independent insurance agent can help you decide if named peril homeowners insurance provides enough protection for you.
What's the Difference Between HO2 and HO3 Insurance?
When choosing HO2 vs. HO3 insurance, it's helpful to understand the distinction in these policies. While both types of policies provide coverage in the same categories, the amount of coverage they provide in each category is not equal. HO-2 insurance only provides named perils coverage in every property category.
HO2 vs. HO3 Insurance
| Coverage Category | HO-2 Policies Cover: | HO-3 Policies Cover: |
|---|---|---|
| Dwelling Coverage | Named perils only | Open perils |
| Contents coverage | Named perils only | Named perils only |
| Other structures coverage | Named perils only | Open perils |
You'll have much more coverage for your home's structure and additional structures under HO-3 insurance. However, both policies only provide named or listed perils coverage for personal property.
What's Not Covered by HO-2 Insurance?
Many types of disasters are specifically excluded by HO-2 policies. It's important to be aware of these coverage exclusions before you try to file a claim. Often, HO-2 insurance won't cover any of the following:
- Pest, insect, or rodent damage or infestations
- Pet damage
- Power failure
- Mudslide and landslide damage
- Sinkholes
- Mold damage and remediation
- Routine wear and tear
- Sewer or drain backups
- Nuclear accidents
- Acts of war
- Intentionally inflicted damage
- Intentional or malicious acts against others
Your independent insurance agent can help you review your HO-2 policy for its specific list of coverage exclusions.
An Independent Insurance Agent Can Help You Find the Right HO-2 Policy and Other Types of Home Insurance
The best way to figure out if the HO2 home insurance policy is right for you is to work with a local independent insurance agent. These agents have access to multiple insurance companies, so they're free to shop and compare several policies and rates for you.
They'll present you with only the best quotes for HO-2 insurance and other types of homeowners coverage. And down the road, your agent can help you file home insurance claims and update your policy as necessary.
Sources
https://www.bankrate.com/insurance/homeowners-insurance/ho2/
