Comparing the HO2 and HO5 Home Insurance Policies

by GuestPoster on February 3, 2012

Comparing home insurance policies can be difficult from a top-down level. When you look at just certain aspects of different policies, however, the comparisons become much easier. Here we take a look at two different insurance policies, and note their differences and similarities. The two policies we’re looking at are the HO2 and the HO5.

Open Peril vs. Named Peril

The largest difference between these two insurance policies is the number of perils that are insured under each policy. The HO2 insures property on a named peril basis. This means that every peril that is insured under the HO2 policy is specifically listed in the policy. If the HO2 insurance policy covers the peril in question, you should be able to find out by referencing your policy.

The HO5, on the other hand, insures property on an open peril basis. This means that every peril imaginable is covered under the policy, with a few exceptions. Rather than listing in the policy what perils are covered, the HO5 only lists the perils which are excluded from the policy. If there is damage and as an HO5 insurance owner you want to know if you’re covered, simply check to see if your policy excludes the peril. If not, the peril should be covered!

Cost of the Policies

Another difference between the two policies is the cost. With most products, the product that offers better quality is often more expensive. There is no difference here. The HO5 insurance policy is typically a little more expensive than the HO2 insurance policy. Even looking across all companies, you’d have a difficult time finding a company offering HO5 insurance for a less expensive price than HO2 insurance.

Same Six Sections of Coverage

One area where these two policies are similar, however, is the sections of coverage they offer. Both insurance policies offer the traditional six standard sections of insurance coverage that is found in 90% of home insurance the policies in North America. Those sections are:

- Dwelling

- Other Structures

- Personal Property

- Loss of Use

- Medical Payment

- Liability

Although both policies cover the same six sections of coverage, it is important to remember that they don’t insure the same perils, and thus there will still be minor differences in how these different sections are covered under the insurance policy.

Overall, the HO2 and the HO5 insurance policies are not all that different. The main difference that ultimately affects the price of each product is the number of perils each policy insures. Whether one policy is better or worse for you depends on the type of insurance you are looking for.

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