Your home maybe the most important asset that you own and that’s why it’s important to understand the insurance coverage that your homeowners policy is providing. It can be confusing because the insurance company or agent can offer various homeowners insurance policies, with each policy offering different coverages. I would like to review the main 3 policies that are being offered to home owners today. The HO-2, HO-3, and HO-5 homeowners insurance policies are the most common policies written. The higher number means the coverage being offered by the insurance company is broader and offering more coverage for the dwelling (structure) and the contents (furniture, TV, stereo..Etc) within the home. Let’s start with an HO-2 policy, also known as “Broad Homeowners Insurance Policy”.
Broad Homeowners Insurance Policy (HO-2)
A broad homeowners insurance policy provides coverage against 16 specified perils for your dwelling & contents within the home, also known as “Named Peril Coverage.” “Named Peril Coverage” means coverage will be provided if what caused the damage is one of the 16 perils specifically mentioned in your insurance policy. A “Peril” is insurance language for specific dangers that could cause damage to your property. For example, hail, lightning, and fire are all perils.
The 16 perils that are named in the HO-2 policy are as follows;
1. Fire or lightning 2. Smoke 3.Explosion 4.Windstorm or hail 5.Theft. 6. Vandalism and malicious mischief. 7. Damage caused by vehicles. 8. Damage caused by aircraft. 9. Riot or civil commotion 10.Volcanic eruption. 11. Falling objects. 12. Weight of ice, snow or sleet. 13. Freezing of plumbing, heating or air conditioning systems, or of a fire sprinkler system or domestic appliance 14. Accidental discharge, leakage, or overflow of water or steam from within a plumbing, heating, or air conditioning system or domestic appliance 15. Sudden breakage, cracking, burning, or bulging of a steam or hot water heating or air-conditioning system, or of a fire sprinkler system 16. Sudden and accidental damage from artificially-generated electrical currents (excluding tubes, transistors and similar components).
Special Homeowners Insurance Policy (HO-3)
A special homeowners insurance policy provides “All Peril Coverage” for your dwelling, but “Named Peril Coverage” for your contents within the home. “All Peril Coverage” means that unless the peril is specifically excluded, than the policy will provide coverage. Specified exclusions are ordinance or law, earth movement, water damage (including flood), power failure, neglect, war, nuclear hazard, intentional loss and governmental action. A big difference between the HO-2 and the HO-3 homeowners insurance policy is that the HO-3 provides “All Peril Coverage” for your contents but the HO-2 policy only provides “Named Peril Coverage” for your contents.
Comprehensive Homeowners Insurance Policy (HO-5)
A comprehensive homeowners insurance policy provides “All Risk” coverage for the dwelling and the contents within the home. By this we mean that no matter what damage is caused to your home or contents, it will be covered, unless it is specifically excluded. The HO-5 policy has the same exclusions as mentioned for the HO-3 policy. The main difference between the HO-3 and the HO-5 policy is that the HO-5 policy provides “All Risk Coverage” for your contents but the HO-3 policy is only providing “Named Peril Coverage” for your contents, meaning it only provides coverage for your contents against the 16 named perils listed at the beginning of the page.
