What Is an HO-2 Policy and What Does It Cover?

An HO-2 homeowners insurance policy is a specific type of coverage designed to protect a residence and its contents from particular risks. It operates on a “named peril” basis, meaning it provides financial protection only for losses caused by events explicitly listed within the policy document. This type of policy is considered more comprehensive than a basic HO-1 policy but offers less extensive coverage compared to the more common HO-3 policy.

Specific Covered Perils

An HO-2 policy covers damage from 16 distinct perils. These include fire or lightning, windstorm or hail, and explosions. It also covers losses from riots or civil commotion, damage from aircraft or vehicles, and smoke. Other perils include vandalism or malicious mischief, and theft. It covers falling objects, and damage due to the weight of ice, snow, or sleet. Water damage from accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system. Additionally, sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, air conditioning, or automatic fire-protective system. Freezing of a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or a household appliance, and sudden and accidental damage from artificially generated electrical current.

Standard Coverage Components

Beyond the specific perils, an HO-2 policy provides several standard components of financial protection once a covered event occurs:

Dwelling coverage (Coverage A) protects the physical structure of the home itself, including the roof, walls, and foundation. This also extends to attached structures like a deck or garage.
Other structures coverage (Coverage B) applies to detached buildings on the property, such as sheds, fences, or detached garages.
Personal property coverage (Coverage C) protects personal belongings like clothing, furniture, and electronics, even when they are away from the home.
Loss of use coverage (Coverage D) provides reimbursement for additional living expenses, such as hotel stays or meals, if the home becomes uninhabitable due to a covered loss.
Personal liability coverage (Coverage E) offers protection against claims for bodily injury or property damage to others for which the insured is legally responsible.
Medical payments to others (Coverage F) covers medical expenses for guests injured on the insured’s property, irrespective of fault.

Common Policy Exclusions

Despite its broad coverage for named perils, an HO-2 policy does not cover all potential losses. Several common exclusions are found in these policies. Losses due to earth movement, such as earthquakes, landslides, or mudslides, are not covered. Water damage from floods, sewer backups, or water that seeps up from the ground is excluded. Other common exclusions include damage caused by power failure originating off the insured premises, and neglect, referring to damage resulting from a lack of proper maintenance. Losses due to acts of war, nuclear hazard, or intentional acts by the insured are excluded. Furthermore, damage from pests like rodents or insects, and wear and tear from normal use, are not covered.