Home Insurance Policies: HO – 2, HO – 3, HO -3

The extent of your coverage under any homeowner’s policy is determined by the type of policy you have. Basically, there are two ways your coverage can be classified. Namely, these are open and named peril. Simply put, a peril is any action that results in damage to your home, belongings, or you. Read on to find the definitions of the two.

  • Open Peril: In this type, you find all the uncovered hazards listed. This kind of coverage is much broader.
  • Named Peril: With this, your policy will stipulate all the threats and hazards that your home insurance covers.

In an HO – 2 policy, you’ll find your home insurance is very bare-boned. The coverage only goes as far as your personal property and your named-peril dwelling structures. Below, you’ll find the causes a named peril HO-2 covers:

  • Theft
  • Damage from aircraft
  • Riots
  • Vandalism
  • Lightening
  • Damage from vehicles
  • Fire
  • Freezing of household systems
  • Windstorm and hail
  • Weight of snow, sleet, and ice
  • Explosions
  • Sudden cracking, bulging or tearing of home
  • Water discharge, damage or overflow
  • Volcanic eruptions
  • Damage from electric current generated from artificial sources

How Does Home Insurance Work?

A homeowner pays premiums, usually every month, to a home insurance company. In return for these premiums, the insuring company provides financial intervene in the event of any covered losses. The important word here is "covered." This is because the compensation provided by the home insurance company only goes as far as the coverage limits stated in the insurance policy. Hence there are other types of insurance policies. In another post in this series, we will look at HO-3 and HO-5.