What is an HO-2 Insurance Policy?
HO-2 insurance protects your home and personal belongings from 16 named perils and additional living expenses if your home becomes uninhabitable.
HO-2 insurance: policy definitions and details
HO-2 is the technical term for a particular homeowners policy tier. An HO-2 home insurance policy covers only your home and personal property against threats specifically named on the policy's declarations page. An HO-2 policy is often called a named peril policy — the covered threats are specifically listed. Below are the 16 named perils covered by an HO-2 policy.
| Perils included: | ||
|---|---|---|
| Lightning or fire | Falling objects | Water damage from plumbing, heating, or air conditioning overflow |
| Hail or windstorm | Volcanic eruption | Water heater cracking, tearing, and burning |
| Damage caused by aircraft | Damage from the weight of snow, ice, or sleet | Damage from electrical current |
| Explosions | Smoke damage | Frozen pipes |
| Riots or civil disturbances | Damage caused by vehicles | Theft |
| Vandalism |
HO-2 policies are uncommon. Most insurance companies only write an HO-2 if they deem the risk presented by you and your property to be too great for a higher-level policy. An HO-2 policy can leave you and your belongings vulnerable to many unnamed perils.
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What does an HO-2 policy cover?
An HO-2 policy is fairly basic. The physical structure of your home, any other structures — fences or a detached garage — and your personal belongings are only insured against threats specifically named on the policy.
With an HO-2 policy, property and contents coverage are both on a named peril basis.
An HO-2 policy offers reimbursement at actual cost value or replacement cost value. Actual cash value considers depreciation in your claim payout, which means you will get less than you originally paid after a property damage claim.
A replacement cost reimbursement system reimburses you the amount needed to get a new item at its current market value. This is a more comprehensive form of coverage.
✅ Liability coverage
With a typical homeowners insurance policy, liability applies worldwide — except when you’re driving a vehicle. If you are found liable for damage to another person’s property or their bodily injuries, this coverage would provide assistance.
✅ Personal property
This includes your wardrobe, your furniture, your TV, your paintings, and any other personal property. Sub-limits for personal property exist on most insurance policies. Below are standard homeowners personal property limitations.
| Sub-limit | Property | Limitations |
|---|---|---|
| $200 | Money, gold, coins | |
| $1,500 | Jewelry, watches, furs | Theft-only |
| $1,500 | Watercraft, trailers | Theft-only |
| $2,500 | Firearms | |
| $2,500 | Silverware | |
| $2,500 | Business property | On-premises |
| $500 | Business property | Off-premises |
| Varies | Electronics |
A named peril is any factor covered by your insurance provider. Each of these is specified in the policy documents.
✅ Additional living expenses
If your home is deemed unlivable due to a covered loss, this coverage will cover the costs for you to live elsewhere. You are usually limited by duration or a monetary amount. This is sometimes referred to as "loss of use."
✅ Medical payments to others
If a guest is injured on your property, this coverage pays for their medical expenses up to the coverage limits.
This may cover the cost of:
- Medical bills and payments
- Surgical costs
- X-ray costs
- Dental procedures
- Ambulance and hospital fees
- Nursing care
- Prosthetic devices
- Funeral services
How to Read a Homeowners Insurance Policy | The Zebra
Master the essentials of your homeowners insurance policy, learn how to interpret the declaration page, identify coverage limits & recognize exclusions.
What does an HO-2 policy not cover?
The drawback of an HO-2 policy is that it only covers named perils—specific threats listed in the policy. Anything not named isn’t covered. That means your home and personal belongings don’t have the broader protection of an open-peril policy, which is generally considered more comprehensive.
Because of this, most U.S. homeowners choose to insure at least their dwelling on an open-peril basis for added peace of mind.
⚠️ Additional exclusions
There are some extra HO-2 policy exclusions worth mentioning. Many of these circumstances are excluded from any homeowners insurance policy.
- Flood
- Hurricane
- Mold*
- Vandalism to vacant dwellings
- Wear and tear
- Property damage caused by pets
- Earthquakes**
- Enforcement of building codes and similar laws
- Intentional acts
- Neglect
- Government acts
*Some policies allow you to add limited coverage for mold damage.
**You can add earthquake insurance separately.
HO-2 considerations
Because it only provides coverage on a named-peril basis, an HO-2 is not very common. Most insurance agents encourage their clients to insure their homes for an HO-3 (Special Form Policy) or an HO-5 (Comprehensive Form Policy).
Occasionally, your insurance provider might require you to insure your home on an HO-2 basis if the risk presented is too high. This can happen when insuring an older home.
Outside of these circumstances, an HO-2 is not recommended. Your home is an investment and should be insured as such. Consider an HO-3 or an HO-5 policy instead.
If you’re looking for a competitive quote for homeowner’s insurance, reach out to our team of licensed agents or enter your ZIP code below.
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HO-2 policy FAQs:
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- Home Insurance for Older Homes
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- What is an HO-3 Insurance Policy?
- Low-Income Homeowners Insurance
- How to Read a Homeowners Insurance Policy
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