What Is An HO-2 Policy? - Policygenius

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Table of contents

1. What is an HO-2 policy?
2. What does an HO-2 policy cover?
3. What does an HO-2 policy not cover?
4. HO-2 policy vs. HO-3 policy

Table of contents

1.

What is an HO-2 policy?

2.

What does an HO-2 policy cover?

3.

What does an HO-2 policy not cover?

4.

HO-2 policy vs. HO-3 policy

Back to top

An HO-2 policy, also known as a broad form policy, is homeowners insurance that contains more coverage than the most basic of policy forms but less coverage than a standard HO-3 policy. An HO-2 provides coverage for your home and personal property against 16 named perils listed in the policy form. It also covers loss of use, your personal liability, and medical payments if a guest is injured on your property. 

Key takeaways

• An HO-2 policy is a type of homeowners insurance that provides coverage against 16 perils.

• A standard homeowners insurance policy has more comprehensive coverage than an HO-2.

• This type of coverage only makes up about 5% of single-family home insurance policies on the market.

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What is an HO-2 policy?

The HO-2 policy is a type of homeowners insurance that's much less common than the traditional HO-3 policy you likely know to be standard home insurance. An HO-2 policy is a named peril policy, meaning you're only protected against the perils listed on the policy. 

Here’s a look at the coverages included in an HO-2 homeowners insurance policy.

Coverage	What does this coverage do?	Loss valuation
Section I - Property Coverages
Coverage A - Dwelling	Covers the structure of your home and built-in appliances	Replacement cost
Coverage B - Other Structures	Covers detached structures on your property	Replacement cost
Coverage C - Personal Property	Covers your personal belongings both inside and outside the home	Actual cash value
Coverage D - Loss-of-use	Pays for additional living expenses while your home is being repaired
Additional Coverages	Explains all the additional coverages in a standard policy—like debris removal, loss assessment and ordinance or law—and the insured limits of each
Section II - Liability Coverages
Coverage E - Personal Liability	Pays for legal and medical bills if you're held liable for injury or personal property damage to someone else
Coverage F - Medical Payment To Others	If a guest is injured in your home, it pays for their medical bills, regardless of who is at fault

Collapse table

What does an HO-2 policy cover?

An HO-2 policy covers your home and personal property from the 16 named perils listed in the policy. 

Here’s a look at the 16 named perils that you’re covered against in an HO-2 policy:

• Fire or lightning

• Windstorm or hail

• Explosion

• Riot or civil commotion

• Aircraft

• Vehicles

• Smoke

• Vandalism

• Theft

• Falling objects

• Weight of ice, snow, or sleet

• Accidental discharge or overflow of water or stream

• Sudden and accidental tearing apart, cracking, burning, or bulging of a built-in appliance like a water heater or centralized air conditioner or heating system

• Freezing

• Sudden and accidental damage from an artificially generated electrical current

• Volcanic eruption

➞ For a more comprehensive breakdown of what’s covered and what’s not, check out our guide on homeowners insurance perils

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How much does an HO-2 policy cost?

HO-2 homeowners insurance policies cost $1,131 per year on average, according to 2019 data analyzed by the National Association of Insurance Commissioners. [1]  

In comparison, a standard HO-3 policy — the most popular form of homeowners insurance — costs $1,754 per year on average, according to our analysis of 2022 home insurance rate data across the country. 

What does an HO-2 policy not cover?

In general, an HO-2 policy will not cover the following perils:

• Ordinance or law

• Earth movement

• Water damage from flooding, sewer backups, or water that seeps up from the ground

• Power failure

• Neglect

• War

• Nuclear hazard

• Intentional loss

• Government action

• Theft to a dwelling under construction

• Vandalism or malicious mischief (if vacant more than 60 days)

• Mold, fungus, or wet rot (except if it resulted from an accidental discharge or overflow of water)

• Wear and tear

• Mechanical breakdown

• Smog, rust or other corrosion

• Smoke from agricultural smudging and industrial operations

• Discharge, dispersal, seepage of pollutants

• Settling, shrinking, bulging, or expanding of parts of the structure like your foundation or walls

• Birds, vermin, rodents, insects

• Animals owned by insured

HO-2 policy vs. HO-3 policy

While HO-3 policies are the most popular form of homeowners insurance, HO-2 policies are still used by insurers in certain situations. For example, many insurers use HO-2 policies to insure mobile homeowners by simply adding a mobile home insurance endorsement to the policy.

With all of that being said, what makes an HO-2 policy different from an HO-3 policy?

Policy

HO-2 policy

• Named perils policy, meaning your home and personal property are only covered against the 16 specific perils listed in the policy form.

• Onus is on you to prove a named peril damaged your property.

Policy

HO-3 policy

• All risks, or open perils, policies — meaning the structure of your home is protected against except the specific perils listed in the policy form. 

• The burden of proof is on the insurer to demonstrate that a particular peril isn’t covered when you file a claim. 

• Personal property is protected against named perils.

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References

Policygenius uses external sources, including government data, industry studies, and reputable news organizations to supplement proprietary marketplace data and internal expertise. Learn more about how we use and vet external sources as part of oureditorial standards.

1. National Association of Insurance Commissioners

   . "

   Dwelling Fire, Homeowners OwnerOccupied, and Homeowners Tenant and Condominium/Cooperative Unit Owner’s Insurance Report: Data for 2018

   ." Accessed February 24, 2022.

Authors

Pat Howard

Managing Editor & Licensed Home Insurance Expert

Pat Howard is a licensed insurance expert and former managing editor at Policygenius. Pat has written extensively about the home insurance industry and his insights as a subject matter expert have appeared in several top tier publications, including The New York Times, The Wall Street Journal, CNBC, and Reuters. Pat has a bachelor's degree in journalism from Michigan State University.

Kara McGinley

Senior Editor & Licensed Home Insurance Expert

Kara McGinley is a former senior editor and licensed home insurance expert at Policygenius, where she specialized in homeowners and renters insurance. As a journalist and as an insurance expert, her work and insights have been featured in Forbes Advisor, Kiplinger, Lifehacker, MSN, WRAL.com, and elsewhere.

Expert reviewer

Britta M. Moss

Property & casualty claim consultant and expert witness

Britta M. Moss, CPCU, SCLA, AIC-M, has over 25 years of insurance industry experience. In her work as a property and casualty claim consultant, she provides consultation and expert witness services in claim handling standards, practices, and norms.  She has been retained by law firms representing plaintiffs and those representing insurer defendants involved in disputes or litigation regarding coverage analysis, investigation, liability determination, damage evaluation, negotiation and settlement.  She is a graduate of The Ohio State University. 

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