4.1 Homeowners Forms HO-2 through HO-8 and Eligibility

The ISO Homeowners Program

The modern homeowners (HO) policy packages property and liability coverage into one contract. Most states use ISO forms, and the editions you will see tested are the HO 2011 program (the ISO 00 03 05 11 edition) and the earlier HO 2000 series. Each form is built on the same skeleton: a Declarations page, the Agreement and Definitions, Section I (property), Section II (liability), and the Conditions that apply to both.

What distinguishes one form from another is two things: (1) the breadth of perils covering the dwelling and personal property, and (2) the eligibility of the insured. Memorizing which form is named-peril versus open-peril is the single highest-yield fact on the homeowners portion of the exam.

The Six Tested Forms

The forms are identified by their ISO numbers. Do not confuse the form number with the form name:

Note the asymmetry of the HO-3: the building is open-peril but the contents stay named-peril. The HO-5 is the only form giving open perils on both the structure and contents. The HO-4 and HO-6 are the contents-only forms for people who do not own the structure outright.

Named Peril vs. Open Peril (The Burden of Proof Trap)

This distinction controls who must prove what at claim time, and exam questions love it:

• Named peril (specified peril): Coverage applies only if the loss is caused by a peril listed in the policy. The insured carries the burden to show the loss came from a covered peril.
• Open peril (all-risk / special): Coverage applies to any direct physical loss except what is excluded. The burden flips: the insurer must prove an exclusion applies to deny.

Because open-peril shifts the burden, HO-3 and HO-5 are broader and cost more. The HO-3 is the most commonly sold owner-occupied form in the U.S.

HO-8 Modified Form

The HO-8 exists for older homes where the replacement cost greatly exceeds market value — for example, a 100-year-old masonry home that would cost $400,000 to rebuild but sells for $180,000. ISO would not write an HO-3 on it because the insured could over-recover. The HO-8 therefore settles losses on a functional/repair-cost (modified ACV) basis rather than replacement cost, and it uses a stripped-down named-peril list (often only the original ten 'basic' perils, with theft limited to the dwelling premises).

Eligibility Rules

Eligibility is tied to occupancy and structure type:

• HO-2/HO-3/HO-5/HO-8: Owner-occupied one-to-four family dwellings; the named insured (or spouse) must occupy the dwelling. Incidental business and roomers up to two are usually allowed.
• HO-4 (Renters): A tenant who does not own the building; provides Coverage C contents plus liability and a small building-additions (Cov A) allowance, typically 10% of Cov C.
• HO-6 (Condo): A unit owner. The condo association's master policy covers the building shell; the HO-6 covers the owner's personal property, improvements, and a baseline $5,000 Coverage A (increasable) for items the master policy excludes.

Trap: A dwelling held for rental to others is not eligible for a homeowners policy — that exposure goes to the Dwelling Property (DP) program, not HO. Mobile/manufactured homes need the MH endorsement (MH 04 01) added to an HO-2 or HO-3, because the uneligible standard HO will not cover them as-is.

Why Editions Matter on the Exam

Producers should know the HO 2011 program tightened several definitions versus HO 2000 — notably narrowing 'residence premises' and updating the mold and ordinance-or-law treatment. An exam may reference a specific ISO number such as HO 00 03 (the special form) or HO 00 05 (comprehensive); the trailing digits identify the edition date. You are not expected to recite full edition dates, but you must connect the number to the form name.

Finally, remember that the HO-1 (Basic Form) has been withdrawn in most states and is rarely tested; when an exam lists 'HO-2 through HO-8,' the HO-1 and HO-7 gaps are intentional. The HO-3 dominates the owner-occupied market, the HO-5 is the premium upgrade, and the HO-4/HO-6 fill the renter and condo niches respectively. Match the applicant's ownership status first, then the breadth of perils they can afford.

Matching the Applicant to the Form

The fastest way to answer a form-selection item is to identify ownership status first, then peril breadth. An owner-occupant of a single-family home who wants the broadest affordable coverage takes the HO-3; one who wants open-peril contents too pays more for the HO-5. A renter takes the HO-4; a condo unit owner takes the HO-6; an owner of an older home whose rebuild cost far exceeds market value takes the HO-8. A dwelling rented to others is ineligible for any HO form and goes to the Dwelling (DP) program. Run that decision tree and most homeowners-eligibility questions answer themselves.

Condo and Renter Nuances

The HO-6 dovetails with the condo association's master policy. If the master policy is bare-walls, the unit owner needs more Coverage A for interior finishes; if it is all-in, the owner needs less. The HO-6 also carries Loss Assessment coverage for the owner's share of association charges. The HO-4 gives the tenant a small building-additions allowance (about 10% of Coverage C) for improvements the tenant installs. Expect a question that turns on who insures the bare walls - the answer hinges on the master-policy type.