What Is an HO2 Home Insurance Policy?

One of the many types of home insurance is an HO-2 home insurance policy. HO-2 policies cover your home from damage on a named perils basis. Keep reading to learn what that means, whom HO-2 policies are best for, and what they cost.

Key takeaways

• HO-2 policies insure your home, other detached structures, and possessions against specifically named perils. 
• The insurance policy also covers liability, medical expenses, and additional living expenses.
• Other homeowners insurance policies are more comprehensive, therefore, HO-2 policies aren’t very popular.
• For homeowners with older homes or properties that are difficult to insure, HO-2 insurance may be a good option.

Understanding your HO-2 policy

An HO-2 policy is a property insurance policy that covers your home, other detached structures, and their contents. In addition, the policy typically provides coverage for personal liability and additional living expenses if you are forced to vacate your home due to damage. 

HO-2 policies are typically less expensive than other types of homeowners insurance because they offer limited coverage and only cover specific incidents, also known as perils. Common perils included in these policies are wind, fire, freezing, theft, vandalism, and freezing. HO-2 insurance is a named peril policy, meaning that it only covers perils listed in the policy.

Who is HO-2 insurance for?

HO-2 insurance is designed for homeowners living in residential properties. It covers the homeowner’s structure and personal belongings like furniture, appliances, and clothing in the event of damage or theft. 

The more comprehensive HO-3 or HO-5 policy is better for most homeowners. However, if you own an older home and can’t afford HO-3 insurance, an HO-2 policy may be able to offer sufficient coverage.

Understanding your HO-2 policy insurance coverage

Here’s what you can expect to get covered with an HO-2 insurance policy:

Dwelling and other structures

An HO-2 homeowners policy covers losses to dwellings and other structures on the property.

Dwelling coverage insures the structure of your home against damage from fire, wind, hail, theft, and other covered perils. Other structures coverage ensures that detached structures on the property, such as a garage or shed, are safe against the same perils. 

Personal property

A personal property insurance policy is designed to protect your possessions in the event of damage or theft. Some of the most commonly covered items include furniture, electronics, clothing, and appliances.

Loss of use

Loss of use coverage protects you if your home becomes uninhabitable due to a covered loss. This could include damage from a natural disaster, such as a hurricane, or a man-made event, such as a fire. HO-2 policy coverage will reimburse you for the cost of living in a temporary location while your home is being repaired or rebuilt. 

Personal liability

Personal liability coverage kicks in if you are liable for someone else’s property damage or bodily injury. For example, with the specific personal liability insurance peril found within your HO-2 insurance policy, you will receive coverage to protect you from legal fees, medical bills, and lost wages if you’re held liable for someone else’s injury. This type of coverage also protects you if you damage property that isn’t your own. Personal liability coverage, however, does not cover intentional damage or injuries.

Medical expenses to others

Medical payments coverage can help with medical expenses if a guest is injured in your home. This coverage is available regardless of the person who caused the injury, and the insurance covers everything from ambulance rides to treatment and rehabilitation costs. 

Make sure to check and see how much coverage is available. Coverage of $100,000 may seem like a lot of money, but if someone ends up needing years of rehabilitation due to an accident, that sum may be inadequate to cover the amount for which you’ll be responsible. If the amount isn’t sufficient for your needs, you may need to consider extended coverage options. 

What is not covered by an HO-2 insurance policy?

HO-2 is a named peril policy and will only cover specifically-listed perils. While it offers more protection than an HO-1 policy, it provides less coverage than the open-peril option like HO-3 and HO-5 that cover all perils except listed exclusions.

How much HO-2 coverage is needed?

A common question among homeowners is, “How much insurance do I need?” These are the main factors to consider when choosing how much coverage you should be getting:

• Your home’s replacement cost: You should purchase a dwelling coverage (Coverage A) limit that is sufficient to rebuild your home to its current specifications.
• Your personal property’s value: You should have a sufficient personal property limit to replace all your personal belongings should you experience a total loss.
• Your homeowner risks: If you have animals or frequently have guests over, make sure you have adequate liability coverage. 

Your Net Worth: You should buy enough liability coverage to protect your assets, including your home and investable assets, minus your debt.

How much does an HO-2 insurance policy cost?

What is the average cost of homeowners insurance? Many factors go into determining the cost of a home insurance policy, including the size and age of the home, the location of the home, and the type of coverage you purchase.

Comparing your quotes to the average cost of local homeowners insurance in your area can help you decide whether a policy is right for you. 

At Hippo, we can help you find the policy that gives you the most protection and peace of mind for your money. Get a homeowners insurance quote in 60 seconds, or give us a call at (877) 838-8866.

Still have questions?

What’s the difference between an HO-2 and HO-3 policy?

Both HO-2 and HO-3 policies provide coverage for owner-occupied dwellings. They cover the dwelling, other detached structures, personal property, and loss of use. HO-2 policy, however, provides dwelling coverage for only 17 specific named perils, while HO-3 provides dwelling coverage on an open-peril basis meaning all perils are covered unless they are specifically listed as excluded in the policy.

Does HO-2 cover floods?

HO-2 policies do not typically cover flood damage. If you need coverage for flooding, you’ll need to buy a separate flood insurance policy. Hippo can help address your flood insurance needs.

How much does an HO-2 policy cost?

The cost of HO-2 homeowners insurance depends on your location, the size of your home, and the amount of coverage you choose. You can find a suitable price by comparing different insurance quotes.

What are the six main coverages in a homeowners insurance policy?

Homeowners insurance policies generally provide six main coverage options: 

• Dwelling 
• Other structures
• Personal property
• Loss of use
• Personal liability
• Medical expenses of others