Homeowners Policy Forms & Coverages

The Homeowners Forms

The Homeowners (HO) program packages property and liability coverage for owner-occupants and, in two forms, for renters and condo owners. The form number signals who is eligible and how broad the perils are.

The HO-3 Special Form is by far the most common: the dwelling and other structures are open peril, while personal property is named peril. The HO-5 Comprehensive Form is the premium option, extending open-peril coverage to personal property as well. The HO-8 Modified Coverage Form is built for older or historic homes whose replacement cost far exceeds market value; it pays building losses on an actual cash value or functional replacement basis to avoid over-insuring.

HO-4 and HO-6: Renters and Condo Owners

Two forms do not insure the dwelling structure the way the others do:

• HO-4 (Contents Broad Form) is the renters/tenants policy. It insures the tenant's personal property (Coverage C) on a named-peril basis, plus loss of use and liability, but provides no Coverage A because the tenant does not own the building. A small amount of coverage for tenant's improvements and betterments is built in.
• HO-6 (Unit-Owners Form) is the condominium policy. The condo association's master policy insures the building exterior and common areas, so the HO-6 covers the unit owner's personal property, interior improvements, and liability, with a built-in (often modest) amount of Coverage A for walls-in/betterments that the owner can increase by endorsement.

This division mirrors who owns what: a renter insures belongings, a condo owner insures belongings plus the interior the master policy excludes, and a homeowner insures the whole structure.

A further wrinkle is eligibility: the owner-occupant forms (HO-2, HO-3, HO-5, HO-8) generally require that the named insured live in the home as a primary residence, which is why a landlord must fall back on the Dwelling program. The HO-8 also serves a special purpose — for an older home whose replacement cost greatly exceeds its market value, full replacement-cost coverage would over-insure the risk, so the HO-8 deliberately settles on actual cash value or functional replacement to keep the policy economically sound.

Coverages A through F

Homeowners coverages are split into Section I (property) and Section II (liability).

Coverage B (Other Structures) is commonly provided automatically at 10% of Coverage A, and Coverage C (Personal Property) at a default percentage (often 50%, raised to 70% under HO-5) of Coverage A. Coverage E (Personal Liability) responds when the insured is legally liable for bodily injury or property damage to others, including incidents away from the premises. Coverage F (Medical Payments to Others) pays small, no-fault medical bills for non-residents injured on the premises regardless of fault — it does not pay medical bills for the insured's own household.

Section I vs. Section II, and Common Exclusions

Think of a Homeowners policy as two policies in one binder. Section I is the property half (Coverages A-D); Section II is the liability half (Coverages E-F). Each section has its own conditions, deductibles (Section I), and exclusions.

Key Section I exclusions that show up on exams:

• Flood — surface water and rising water; covered only through the NFIP or a private flood policy.
• Earth movement — earthquake, landslide, sinkhole; available by endorsement in many states.
• Ordinance or law — extra cost to rebuild to current building codes (a limited amount is added back).
• Power failure off-premises, neglect, war, nuclear hazard, and intentional loss.
• Wear and tear, mechanical breakdown, mold, insects/vermin, and settling (the gradual-loss exclusions).

Key Section II exclusions: business and professional liability, auto/aircraft/large watercraft liability, intentional injury, and liability assumed under most contracts. A frequent trap: a Homeowners policy will not respond to an auto accident or to injuries the insured causes intentionally. Many gaps — earthquake, water backup, scheduled jewelry, home business — are filled with endorsements, while flood almost always requires a separate policy.