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.
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 | ||
Covers the structure of your home and built-in appliances | Replacement cost | |
Covers detached structures on your property | Replacement cost | |
Covers your personal belongings both inside and outside the home | Actual cash value | |
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 | ||
Pays for legal and medical bills if you're held liable for injury or personal property damage to someone else | ||
If a guest is injured in your home, it pays for their medical bills, regardless of who is at fault |
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
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
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
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?
