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

The ISO Homeowners Program

Most personal residential property in the United States is insured on Insurance Services Office (ISO) Homeowners forms. The current edition exam writers test is the HO 2011 program (some states still use HO 2000); both share the same six-form architecture. Each policy is built from a base form (the HO-XX) plus the Declarations, definitions, Section I (property), Section II (liability), and any endorsements. Knowing which form a risk qualifies for and what each form covers is the single most heavily tested homeowners topic.

The six forms differ in two ways: who is eligible (owner-occupant, renter, condo unit-owner, older home) and how broadly perils are covered (named-peril vs. open-peril). Memorize the form numbers cold — the exam frequently gives a fact pattern and asks 'which form applies.'

The Six Homeowners Forms

Trap: There is no HO-1 (Basic Form) or HO-7 in the current ISO program — HO-1 was withdrawn in most states. If an answer choice says 'HO-1' or 'HO-7,' it is almost always a distractor.

The HO-3 is the most common owner-occupant policy because it pairs open-peril dwelling protection with affordable named-peril contents. The HO-5 upgrades contents to open peril and is the premium owner form.

Open Peril vs. Named Peril and the Burden of Proof

This distinction drives both coverage and claims handling:

• Named-peril coverage (HO-2, and contents on HO-3/HO-4/HO-6) lists the covered causes of loss. The insured must prove the loss was caused by a listed peril.
• Open-peril coverage (also called 'special' or 'all-risk') covers any direct physical loss except those specifically excluded. Here the insurer must prove an exclusion applies to deny the claim.

This shifting burden of proof is a favorite exam point: open-peril is broader and more claimant-friendly precisely because the company carries the burden to point to an exclusion.

Eligibility Rules and the HO-8

Standard owner forms (HO-2, HO-3, HO-5) generally require an owner-occupied one-to-four-family dwelling. A risk can fail eligibility for several reasons that the exam likes to test:

• The home's replacement cost exceeds its market value (common with older homes) — this risk goes on the HO-8 Modified Form, which settles dwelling losses on a repair-cost / functional replacement basis rather than full replacement cost, and limits perils to about 10 basic causes (no theft of property off-premises, no glass breakage beyond a sublimit, etc.).
• A condominium unit-owner uses HO-6; the association's master policy covers the building shell, so HO-6 carries a small Coverage A (default $5,000, increasable) for interior improvements.
• A renter uses HO-4, which has no dwelling coverage at all.

Dwelling Property (DP) forms — not Homeowners — cover non-owner-occupied rentals, vacant homes, and seasonal dwellings that fail HO occupancy rules.

HO-3 and HO-5 — The Coverage Workhorses

The HO-3 (Special Form) is the most widely sold homeowners policy. It insures the dwelling and other structures (Coverages A and B) on an open-peril basis while keeping personal property (Coverage C) on a named-peril basis. The HO-5 (Comprehensive Form) upgrades Coverage C to open peril as well, so both the structure and the contents enjoy the all-risk grant and the insurer-carries-the-burden-of-proof advantage.

The exam contrasts these with the HO-2 (Broad Form), which is named-peril throughout, and the HO-1, a basic named-peril form now rarely available. A typical item describes a covered owner-occupant who wants the broadest contents protection and asks which form fits — the answer is HO-5, distinguished from HO-3 precisely by open-peril Coverage C.

HO-4, HO-6, and HO-8 Niches

Three specialized forms round out the program. The HO-4 (Contents Broad Form) is the renters/tenants policy: it provides Coverage C personal property and Section II liability but no Coverage A on the building, which the landlord insures. The HO-6 (Unit-Owners Form) is for condominium owners, providing Coverage C plus a small default Coverage A (often $5,000) for owner-installed improvements and betterments, increasable by endorsement.

The HO-8 (Modified Coverage Form) serves older homes whose replacement cost far exceeds market value. It is named-peril and settles losses on a modified/functional replacement cost or repair-cost basis using common construction materials rather than ornate originals, preventing the insurer from owing a costly historic restoration. The exam ties HO-8 to homes where replacement cost would create a moral hazard.

Eligibility Mechanics and Owner-Occupancy

Homeowners eligibility hinges on owner-occupancy of a one-to-four-family dwelling (HO-3/HO-5/HO-8), tenant occupancy (HO-4), or condominium-unit ownership (HO-6). Seasonal and secondary homes can qualify, but a dwelling held purely for rental to others belongs on a dwelling (DP) policy, not a homeowners form — a distinction the exam tests by describing a landlord and asking for the correct program. Incidental business or farming use generally disqualifies the standard HO unless endorsed. Up to two boarders or roomers are typically allowed, and a permitted incidental occupancy (a home office) can be scheduled.