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Home Insurance Policy Forms

Introduction

In the 1950s, homeowners insurance contracts were first introduced. They have been revised several times since then. This article discusses the Insurance Services Office’s (ISO) homeowner forms.

ISO published a new edition of the homeowner’s policy in 2010 for use beginning in 2011. In the United States, ISO forms are widely used.

Some insurers, however, use the American Association of Insurance Services (AAIS) homeowners forms, which are designed by an advisory organization similar to ISO.

Eligible Dwellings

A homeowners policy on a private dwelling is intended for the owner-occupants of a single-family, two-family, three-family, or four-family dwelling that is solely used for private residential purposes (although certain business occupancies are permitted, such as a home daycare business and offices for business or professional purposes).

Also Read: 6 Important Homeowner Insurance Policy Coverage Types

A one-family house may not have more than one additional family or more than two roomers or boarders. Renters and condominium unit owners each have their own homeowner forms.

Overview of Home Insurance Policy Forms

In the current ISO Homeowners (HO) program, the following forms are used:

HO-2 (broad form)
HO-3 (special form)
HO-4 (contents broad form)
HO-5 (comprehensive form)
HO-6 (unit-owners form)

HO-7 (Mobile Home)
HO-8 (modified coverage form)

Also Read: Types of Homeowners Insurance Policies

HO-2 Homeowners 2 (Broad Form)

Homeowners 2 is a named-perils policy that protects the dwelling, other structures (such as a detached garage or tool shed), and personal property from loss due to certain listed perils.

Perils covered include fire, lightning, windstorm, hail, explosion, and others. The HO-2 also covers additional living expenses or fair rental value if a covered loss renders the home uninhabitable.

HO-3 Homeowners 3 (Special Form)

Homeowners 3 protects the dwelling and other structures against direct physical loss. This means that, with the exception of losses specifically excluded, all direct physical losses to the dwelling and other structures are covered.

If certain conditions (discussed later) are met, losses to the dwelling and other structures are paid at full replacement cost with no deduction for depreciation. Personal property is protected against the same broad types of perils as the HO-2 policy.

HO-4 Homeowners 4 (Contents Broad Form)

Homeowners 4 is intended for renters of apartments, houses, or rooms. Homeowners 4 provides personal liability insurance as well as coverage for the tenant’s personal property against loss or damage.

Personal property is protected against the same named perils as Homeowners 2.

Furthermore, 10% of the personal property insurance can be applied to cover any additions or alterations to the building made by the insured.

Despite the fact that most renters require homeowner’s insurance, the vast majority of tenants are uninsured.

A Homeowners 4 policy, on the other hand, is especially valuable in the event of a total loss, such as a fire in which all of your belongings are completely destroyed.

Furniture, clothes, books, laptop computers, and other electronic equipment, television, cosmetics, food, and other personal property can easily cost more than $15,000.

If an insured peril renders the rented apartment or home uninhabitable, additional living expenses are paid. The HO-4 also includes $100,000 in personal liability insurance, which covers the majority of personal activities. The annual premium is typically less than $175.

HO-5 Homeowners 5 (Comprehensive Form)

The Homeowners’ 5 Form protects the dwelling, other structures, and personal property from direct physical loss.

This provision states that all direct physical losses are covered, with the exception of those specifically excluded.

Unlike other homeowner forms that only cover personal property for specifically named perils, HO-5 covers personal property for all direct physical losses unless specifically excluded.

HO-6 Homeowners 6 (Unit-Owners Form)

Homeowners 6 is intended for condominium and cooperative apartment owners.

The condominium association insures the building and other common property owned by the owners of the various units. Homeowners 6 protects the unit owner’s personal property against the same named perils as Homeowners 2.

Furthermore, the condominium unit is insured for a minimum of $5000, which covers certain properties such as built-in appliances, carpets, additional kitchen cabinets, and wallpaper.

HO-7 Homeowners 7 (Mobile Home)

An HO-7 form is typical of a mobile home insurance policy. It aids in the protection of personal property as well as the physical structure of the home. This policy form is an adapted version of a HO-2.

An HO-7 may cover perils other than those covered by a standard HO-2.

HO-8 Homeowners 8 (Modified Coverage Form)

Homeowners’ Form 8 is a modified coverage form that covers loss to the dwelling and other structures based on the repair cost, which is the amount required to repair or replace the damaged property using common building materials and methods.

The payment is not based on the cost of replacement. Actual cash value is used to determine the amount payable in some states.

The HO-8 policy is intended for an older home whose replacement cost is significantly greater than its market value. For example, an older home with a $300,000 replacement cost may have a market value of only $200,000.

When a home’s current market value is significantly lower, insurers will not insure it for replacement costs. As a result, the HO-8 form was created to provide homeowners coverage for older homes while also reducing moral hazards.

The HO-8 policy only provides limited coverage for personal property theft. Theft coverage is limited to a maximum of $1000 per occurrence and only applies to losses that occur on the property.

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