HO2 Insurance Policy
(Broad protection for your beautiful home)
Written by
Christina is a freelance writer and licensed insurance agent. She has worked in many facets of the insurance industry, from entry-level assistant to account manager/sales rep to vice president of operations.
Reviewed by
Christina is a freelance writer and licensed insurance agent. She has worked in many facets of the insurance industry, from entry-level assistant to account manager/sales rep to vice president of operations.
Perhaps you just moved into your dream home or maybe you’ve been living there for many years. Either way, it’s always a good idea to better understand your homeowners insurance.
If you have questions about your HO2 home insurance policy, then you may want to talk with an independent insurance agent today. Or if you’re just killing time, surfing the web for answers about HO2 coverage, then you’ve found the right spot.
The Lowdown on HO2 Policies
An HO2 insurance policy is a simple plan but not as basic as the HO1 policy. In fact, an HO2 insurance plan is known as a “broad coverage” policy.
With an HO2 home insurance, your owner-occupied, stand-alone home is protected from 16 dangers (also called perils) that can harm your residence. That’s six more perils than a basic HO1 policy.
You can’t buy an HO2 policy for a property you rent. An HO2 is also not meant for places like condos or townhomes which have different rules and coverage needs.
Your local independent insurance agent can let you know if an HO2 will work for your needs.
An HO2 Protects You from 16 Hazards
The HO2 covers you from 16 particular threats that may harm your home and other structures on your land like a garage, fence, or shed.
Simply put, if your home is damaged or destroyed by a risk that’s not listed below then you can’t file a claim.
The 16 dangers an HO2 home insurance policy will safeguard your property from are:
- Fire and lightning
- Explosions
- Smoke
- Hail and wind
- Malicious mischief and vandalism
- Theft
- Volcanic eruptions
- Falling objects
- Freezing of household systems
- Weight of sleet, snow, and ice
- Accidental flooding from 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
- Vehicles
Every insurance company has their own spin on HO2 coverage. Most home insurers do cover personal liability and personal property coverage under the HO2 plan.
Let’s say you have a grease fire. Your HO2 policy will usually help you pay to fix the kitchen, including the structure, appliances, and personal items. Plus, if the grease fire gets wild and reaches your neighbor’s home, then your HO2 personal liability will cover any of the neighbor’s repairs that are your fault.
Since HO2 only pays for damage caused by one of the above 16 situations, if anything else happens, then you’ll have to pay out of pocket for the repairs.
HO2 Can Be Actual Cash Value or Replacement Cost
A big part of any homeowners policy is whether your claims will be covered as “Actual Cash Value (ACV)” or “Replacement Cost.”
Here’s the difference:
- Actual Cash Value: ACV home policies pay to replace the home or contents minus the amount of wear and tear on the home or contents.
- Replacement Cost: This home policy will pay you what it will cost to fix or rebuild your home and contents right now. Period.
An HO2 plan is usually a Replacement Cost policy. However, most independent insurance agents will tell you to double-check if your HO2 is a Replacement Cost or Actual Cash Value.
Two Risks that HO2 Insurance Won’t Cover
Be aware there are a few common perils (or dangers) that an HO2 policy will not cover like:
- Earthquake: Any damage due to an earthquake will not be covered.
- Flood: Flood or water damage is not covered, but you can talk with an independent insurance agent about buying add-on protections for this risk.
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Is an HO2 Policy Enough Coverage for Your Home?
HO2 insurance is thought of as an average policy. It offers more protection than an HO1 policy but not as much as the HO3 or HO5 home policies.
Here are three things to think about:
- What type of damage is my home most likely to get?
The 16 risks covered by HO2 cover the most common hazards homeowners experience. Think about the other risks that can happen, like foundation leaks, sewer backup, and power failures. Would you benefit from flood insurance too?
- Which home insurance does my mortgage company want me to buy?
Many mortgage companies and banks will require you to insure the home and additional structures on your property. Typically an HO2 policy will meet their expectations while also giving you protections for liability and personal possessions.
- How much premium can I afford?
The bigger your plan coverages then the bigger your home insurance premium. On the other hand, more comprehensive insurance plans can be a relief when the unexpected occurs. The first time you have to pay for a repair or replacement out of pocket, you may decide paying a bit more in premium is worthwhile.
Maybe the HO2 Is Perfect for You
The best way to figure out if the HO2 home insurance policy is best for you is to talk with an experienced independent insurance agent. You can ask the insurance agent all kinds of questions about your current coverage, like what is (or isn’t) covered. Should you decide that you need to bump up your home policy to the next level, an insurance agent can help get you quotes for higher quality coverage. It’s great that you’re taking the time to understand the HO2 now rather than after you file a claim.