There are several different types of homeowners insurance policies to consider, with HO2 and HO3 being the most common. But what’s the difference between these types of policies? Both HO2 and HO3 policies cover your home structure and personal belongings. So, to help you decide which is the better fit, we’ve broken down both options to examine the difference between HO2 and HO3 homeowners insurance policies.
What is an HO2 Home Insurance Policy?
An HO2 policy is a type of home insurance policy that covers both your dwelling and personal property. This is a named-perils only policy, meaning it only covers damages caused by events, also known as perils, specifically named in your policy. If damages occur due to a peril not listed in your policy, it is not covered. Some of the most common named-perils found in an HO2 policy include:
- Theft
- Fire or Lightning
- Explosion
- Smoke
- Freezing
- Vehicles
- Falling Objects
- Volcanic Eruption
- Windstorm or Hail
- Riot or Civil Commotion
- Damage caused by Aircraft
- Vandalism or Malicious Mischief
- Weight of Ice, Snow, or Sleet
- Cracking, Bulging*
- Artificially Generated Electric Current*
- Water or Stream*
*Indicates that this peril is only covered if the damage is caused as a result of a sudden and accidental event
In comparison to an HO1 policy, an HO2 policy covers more perils. While an HO2 is a step up from an HO1, it still is considered basic coverage. If you have a high-value home, it’s best to consider a policy with more coverage. Similarly, if your personal belongings include high-value items such as jewelry, you might want to consider a policy with more coverage for your personal belongings. In order to find out what your policy covers, get in touch with your insurance provider.
What is an HO3 Home Insurance Policy?
An HO3 policy protects your home but also structures, you and your family from liability/medical costs, and your possessions. Occasionally, providers will also refer to this type of policy as special form homeowners insurance. Similar to the HO2 policy, the HO3 covers your personal belongings under named-perils only. This means that if your policy does not specifically include a peril, you are not covered. However, your home and any other covered structures are written as open-perils, meaning it can cover any risk, or peril, except for those specifically excluded by the policy. The common exclusions in an HO3 policy include:
- Earth Movement
- Power Failure
- Nuclear Hazard
- Collapse
- Settling, Expanding
- Mold, Fungus, Rot
- Smog, Corrosion
- Ordinance/Law
- Neglect
- Intentional Loss
- Construction Theft
- Wear & Tear
- & Ind. Smoke
- Water Damage
- War
- Action
- Vandalism
- Breakdown
- Pollutant Discharge
- Owned Animals
- Birds, Vermin
What is the Difference Between HO2 and HO3 Home Insurance Policies?
The main difference between an HO2 and HO3 home insurance policy is your dwelling coverage. With an HO2 policy, your dwelling coverage is written as named perils, so your home structure is only covered by perils included in your policy. On the other hand, an HO3 policy includes open perils dwelling coverage. This means that unless your policy specifically excludes a peril, your policy covers it.
In order to determine which policy works best for you, start by determining what coverage you are looking for. Then, set your policy limits based on the value of your home, other structures, and personal belongings. Finally, get in touch with an insurance agent to finalize the details of your policy.
Because providers write each policy to fit your exact situation. it’s important to discuss the specifics with your insurance provider. They can help break down the different aspects of each type of home insurance policy, helping you make the best informed decision.
The Right Homeowners Policy For You
Still unsure of which policy is right for you? TGS Insurance is here to help! Our experienced agents are ready to guide you through homeowners insurance options and find the policy that fits you and your family best. In addition, we partner with over 60 top-rated insurance providers and are able to shop the best rates and coverage options available on the market for you. Give one of our agents a call today to learn how much you can save on your homeowners insurance!