HO-5 vs HO-2 Home Insurance
HO-5 covers your home and belongings against all risks except what's excluded. HO-2 only pays for the specific perils it lists.
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What's actually covered
HO-5 starts from everything covered, then lists what's excluded, like flood or earthquake. HO-2 works the other way. Nothing is covered unless it appears on a list, usually fire, wind, hail, theft and a handful of others. If damage comes from something unusual, HO-5 is more likely to pay.
Your belongings matter too
HO-5 usually covers your belongings on the same all-risk basis as the house, and often pays to replace them at full cost rather than what they were worth used. HO-2 covers belongings only for its listed perils, often at actual cash value, meaning depreciation gets subtracted.
What your lender requires
Lenders want proof of dwelling coverage at or above the loan amount, not a specific policy type. HO-5 and HO-2 both satisfy that. The binder you send before closing just needs to show the coverage amount and effective date match what they asked for.
Cost versus the house itself
HO-5 typically costs more than HO-2 because it covers more. Newer homes, or ones in good condition, often qualify for HO-5 more easily since insurers see less risk. Older homes or ones needing repairs may only be offered HO-2 regardless of what you'd prefer.
What that gap costs you if something goes wrong
An HO-2 policy can deny a claim an HO-5 would pay, and leave belongings reimbursed at used value instead of replacement cost. Comparing quotes shows what each actually costs for your house before you're locked in.
How insurers decide which one you can even buy
You don't always get to pick between HO-5 and HO-2 the way you'd pick a trim level on a car. Insurers look at the house first. Age, the roof, the wiring, the plumbing, sometimes the claims history tied to the address all factor in. A house built in the last 15 to 20 years in good repair is an easy yes for HO-5. A house with an older roof or outdated wiring might get offered HO-2 or a similar named-peril policy no matter what you asked for, because the insurer sees more that could go wrong.
The binder you send your lender has to name a real policy an insurer has actually agreed to write. If you tell your lender you're getting HO-5 and the inspection comes back with an aging roof, you may need to switch to HO-2 or a comparable policy days before closing. Asking early, before you're under deadline pressure, gives you room to shop or to budget for repairs that might open up HO-5 pricing.
Some insurers also sell something in between, often called HO-3. It covers the house itself on an all-risk basis like HO-5, but covers belongings only for listed perils, usually at actual cash value. If HO-5 isn't available for your house, ask whether HO-3 is an option before settling for HO-2. The dwelling coverage works the same way as HO-5 even though the contents coverage doesn't, which for some buyers matters more than how the furniture gets reimbursed.
None of this is about which policy sounds better. It's about what an insurer will actually write for your specific house, and what each option costs once you have real quotes in hand. A house that qualifies for HO-5 might still make sense to insure with HO-3 or HO-2 if the price difference is large and your belongings aren't worth much to replace at full cost. Comparing quotes against your actual house, rather than against the general idea of HO-5 versus HO-2, is what tells you whether the upgrade is worth paying for.
Why you might not get a choice at all
Most people shopping for their first policy assume HO-5 and HO-2 are options on a menu, something you pick based on what you want to pay. For a lot of buyers that isn't how it works. The insurer underwrites the house before it underwrites the paperwork. What that inspection turns up decides which policies are even on the table.
Roof age is usually the first thing they look at. A roof past a certain age, often somewhere around 15 to 20 years depending on the insurer, can knock HO-5 off the table even if everything else about the house is fine. Knob-and-tube or aluminum wiring does the same thing. So can old galvanized plumbing, or a furnace well past its expected life. None of these things mean you can't get insured. They mean the insurer sees more that could go wrong, and prices or restricts coverage accordingly.
Asking early matters more than it sounds like it should. If you tell your lender you're getting HO-5 before you've had a quote, and the inspection flags an aging roof, you could be switching policies days before closing with no time to shop around. Getting a real quote as soon as you're under contract, not after, gives you room to either find an insurer willing to write HO-5 anyway, budget for the repair that would qualify you, or settle on HO-2 with enough time to compare a few options instead of taking whatever's fastest.
There's also a middle option worth knowing about called HO-3, which some insurers offer when HO-5 isn't available. It covers the house itself on the same all-risk basis as HO-5, so unusual damage to the structure is still more likely to be paid. Belongings, though, are covered the way HO-2 covers them, against a specific list of perils, usually at actual cash value instead of full replacement cost. For a house that doesn't qualify for HO-5, asking about HO-3 before accepting HO-2 can matter, especially if what happens to the house concerns you more than how the furniture gets reimbursed. Which of these actually fits depends on the house, the insurer, and what things cost once quotes are in hand, not on which name sounds more complete.
Before you request a binder
Check your roof's age and your home's wiring and plumbing, then ask for quotes now. Your lender needs a real policy name and date, and knowing what your house qualifies for early leaves room to compare.
