I was informed a HO2 policy is outdated and very few companies issue them. The place where I recieved this quote has been in business over a 100 years. The HO3 policy is 250.00 higher, gives higher limits, is this over insuring my house?
Best reply by Apple:
You really have a couple of issues going on here.
First, the limits do not matter. Either policy can be written at whatever limit you choose.
Next, almost all insurance companies will write an HO2 or an HO3. Many insurance companies get their policy (also called a Form), from a company called Insurance Services Office, Inc. (ISO).
The term than an HO-2 is out dated is not correct.
The main difference between an HO2 and an HO3 is the “perils insured against”.
An HO2 is a “named peril” policy; it covers things like Fire/Lightning, Wind/Hail, Explosion, Riot, Aircraft, Vehicle Damage, Smoke, Vandalism, Theft, and about 10 other things.
An HO3 is what is called an “all-peril” which covers “all” types of loss to your dwelling. I use “all” in quotes because it honestly does not cover “everything”, as almost no policy will cover everything. It’s just that an HO3 covers substantially more than an HO2.
Most people agree that the marginal increase in premium (in your case $250/year) is well worth the added protection/benefits.
It would probably be best to speak with someone about the differences between an H02 and and HO3; it would be easier to explain over the phone as opposed to an email/answer, however this should get you going in the right direction.
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Difference between HO2,HO3 house insurance policies?
Apple did a great job of explaining the difference between the two policies.
Bottom line is the HO3 is a much better policy.
The coverage for the building and other structures is the significant difference between HO-2 and HO-3. The coverage for personal property is the same in either form.
The difference is this, on an HO-2 form ONLY the perils named in the policy are covered. For a loss to be covered it must be as the result of a peril specifically named (I believe there are 16 perils named). The burden of proof is yours to prove that your loss was caused by one of the named perils.
The HO-3, on the other hand, is what is called an “open” perils policy. Everything is covered except what is specifically excluded. For example – earth movement, flood, nuclear hazard and war are excluded. That means the burden of proof shifts to the company to show that your loss is not covered because it was specifically excluded. The default position is you are covered.
I was an independent insurance agent for over 20 years and I never sold an HO-2 policy except under a State sponsored FAIR plan where it was the last resort and it was the only policy available.
HO2 only covers the things that are named as covered. HO3 covers everything not excluded. Also, if there’s a question of, if it’s covered or not, on the HO2, the insured has to prove it IS covered – on an HO3, the insurance company has to prove it’s NOT covered.
So coverage is much better on the HO3, and if an engineer needs to be hired, the insurance company pays for it, not you.
I would NEVER sell an HO2 over an HO3. It’s WAY less coverage. But YOUR AGENT should be explaining it to you, or you need a new agent.
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