Navigating home insurance can be overwhelming enough as it is without throwing insurance jargon into the mix. But home insurance coverage has different levels to support different insurance needs, including HO-2 insurance and more.
Keep reading and we’ll de-mystify the types of home insurance available to you, so you can shop for insurance with confidence.
Free Home Insurance Comparison - Save up to 30%
No junk mail. No spam calls. Free quotes.
No Signup required
HO-2 insurance is a form of home insurance. Most people don’t actually realize that there are multiple forms of home insurance policies, but this means that you have more options than you think when it comes to protecting your biggest asset.
Keep reading to find out what an HO-2 policy covers, what it costs, and what your other options might be.
Before we get into what an HO-2 policy covers, it helps to compare other home insurance policies.
Here’s a quick breakdown of the different policy types:
When shopping for home insurance, keep in mind there’s no cookie cutter policy that works for everyone. HO-2 insurance is one option for you, and we’ll explore how it works next.
Free Home Insurance Comparison - Save up to 30%
No junk mail. No spam calls. Free quotes.
No Signup required
HO-2 insurance is a popular choice for many homeowners. It walks the line between the lower coverage for HO-1 and the pricier costs of HO-3 insurance. We know that HO-2 insurance covers 16 named perils (see above); this means that only damage from these listed perils are covered. Anything else wouldn’t be covered and you would be stuck paying out of pocket to repair/replace it. This applies to the structure of your home, your property, and your belongings.
HO-2 insurance includes the standard buckets of coverage in homeowners insurance. These include:
For your dwelling and property, your policy will specify if you’re covered on a named or open peril basis. It’ll also specify whether your belongings are covered under actual cost value or replacement cost value—more on that next.
Your home insurance policy will designate whether your belongings are covered under replacement cost value or actual cost value. The difference matters:
With HO-2 insurance, your policy could have either option. Of course, the replacement cost value is more comprehensive and helpful for a homeowner, but it can come with higher premiums.
HO-2 insurance only covers 16 named perils, but it’s helpful to know specifically what your policy doesn’t include, because the answer might surprise you.
HO-2 insurance doesn’t include flood or earthquake damage. These are commonly thought to be included in home insurance, so it’s important to note that they’re not covered by default. If you want coverage from these perils, you usually need to purchase a rider for these on top of your home insurance policy.
Here are some other exclusions from HO-2 coverage:
General upkeep on your home is important because even a named peril could be denied in a claim if the insurer finds that neglect was the root cause. For example: your home is covered for the weight of snow, but if the roof caves in from snow, you may not be covered if your roof was old and needed replacing.
Your home insurance policy cost will depend on a number of factors. These include:
And more. In fact, even how close you live to a fire hall or fire hydrant can affect your premiums. The amount of coverage you choose and your deductible will also impact your cost.
All that being said, there are average HO-2 policy costs that can help give you an idea of what you’ll pay. The average cost of HO-2 home insurance is $1,131 on average. You can compare this with the average cost of HO-3 insurance, which is $1,899 on average.
Your individual cost can vary though, so it’s important to gather quotes and compare coverage before making up your home.
If HO-2 insurance is what you can afford, that’s great. But you can also find savings on home insurance, regardless of policy type, which can help you put some money back in your pocket for a rainy day (or even bump up your coverage).
Here’s how to save on home insurance:
No matter which type of home insurance you choose, whether it’s HO-2, HO-3 or higher, you can find savings on your premiums to help put a little more money back in your pocket.
You have options for your home insurance coverage, which can be good news and bad news. It’s great to have options for your needs and budget, but choosing which policy you truly need can be overwhelming.
It might be helpful to know that HO-3 insurance is the most common form of home insurance. After all, an open-peril policy is much more comprehensive and protective versus a named-peril policy.
But HO-2 insurance is still a great option for coverage, especially if it’s what fits in your budget. As long as you understand the risks of only being covered for named perils, HO-2 insurance can be right for you.
Tip: Deciding what type of home insurance you need can be confusing, let alone figuring out what other types of insurance you might need. If you’re new to the U.S., grab our free insurance handbook for new immigrants here to better understand your options.
We’ve got you covered.
HO-2 insurance can be an affordable option, but it’s not the right option for everyone. If you’re looking for more coverage, HO-3 insurance will give you more peace of mind with open perils. But if you’re okay with a little more risk in your life and want to save money, HO-3 home insurance could be adequate for you.
No matter which route you go, having home insurance is key. And equally important is understanding what you are and aren’t covered for, so you can be more prepared.
Great home insurance is just a few clicks away.
Lauren Lewthwaite Lauren Lewthwaite has been freelance writing for almost five years writing content that ranges from health to insurance and everything in between. Lauren is also a trained translator in French and English and is a dog-mom to an adorable Australian Shepherd.
