Homeowners Forms HO-2 through HO-8 and Eligibility

The ISO Homeowners Program

The Homeowners (HO) program is a package policy that bundles property coverage (Section I) and liability coverage (Section II) into a single contract. Nearly every U.S. insurer files the ISO Homeowners 3 (HO 00 03) form or a near-identical proprietary version, so the national exam tests the ISO editions almost exclusively. The most commonly referenced edition on current exams is the HO 2011 (05 11) series, though the structural logic has been stable since the 2000 program.

A candidate must memorize two things about every form: (1) the perils basis on dwelling/other structures (Coverage A/B) versus personal property (Coverage C), and (2) the loss-settlement basis. Get those two axes straight and most form questions answer themselves.

The Six Tested Forms

The following table is the single most heavily tested item in the homeowners chapter. Note the perils basis: named-peril means the loss is covered only if the cause appears on a list; open-peril (also called "special" or "all-risk") means any cause is covered unless specifically excluded.

Memory hook: HO-3 is "open on the building, named on contents"; HO-5 is "open on both"; HO-8 is the ACV/functional-replacement form for historic or hard-to-replace homes.

The Vanished HO-1 and the HO-8 Trap

The HO-1 (Basic Form) is no longer filed in most states and is generally not tested as a current option; if it appears as a distractor it is usually wrong. The HO-8 (Modified Coverage Form) exists precisely because some older homes have a replacement cost far above market value — an ornate 1910 Victorian with hand-carved millwork.

Insuring such a home at full replacement cost would invite over-insurance and moral hazard, so HO-8 settles losses on an actual cash value or functional-replacement-cost basis and covers a narrower set of named perils than HO-2 (it drops, for example, the falling-objects and weight-of-ice perils on contents in many editions). Functional replacement means damaged plaster may be repaired with drywall and ornate trim with stock millwork.

Classic trap: a question describes a 90-year-old home worth far less on the market than it would cost to rebuild and asks which form applies. The answer is HO-8, not HO-3. A second trap pairs HO-8 with a new luxury home — wrong, because new high-value homes use the HO-5, whose open-peril contents coverage and replacement-cost settlement fit modern construction.

Eligibility Rules

Eligibility is fact-pattern tested. The core rules:

• The insured must have an insurable interest and the dwelling must be owner-occupied for HO-2, HO-3, HO-5, and HO-8 (a tenant occupies under HO-4; a condo unit-owner under HO-6).
• A dwelling may contain no more than four units / four families, and the named insured must occupy at least one unit. Beyond four units, the Dwelling (DP) program or commercial property applies.
• Incidental occupancies (a home office, a studio) are permitted, but a property used primarily for business is ineligible.
• Seasonal/secondary homes are eligible but commonly written only on HO-2 or HO-8, not HO-5.
• Farms, mobile homes, and rooming/boarding houses are excluded from the standard HO program; mobile homes need the Mobilehome endorsement (MH 04 01) to convert an HO-2 or HO-3.

Trap: a duplex where the owner lives in one unit and rents the other is eligible for an HO-3; a four-plex where the owner does not live on premises is not eligible.

The Homeowners Forms Compared

The Homeowners program offers six forms tuned to who occupies the dwelling and how broad the perils are. HO-2 (Broad) covers the dwelling and contents on a named-peril basis. HO-3 (Special) is the most common owner-occupant form: it covers the dwelling and other structures on an open-peril basis while contents stay named-peril, which is the single most tested HO distinction.

HO-5 (Comprehensive) upgrades both dwelling and contents to open peril, the broadest form. HO-8 (Modified) is for older or historic homes whose replacement cost far exceeds market value; it pays on a functional or repair-cost basis to avoid over-insuring obsolete construction and is named-peril.

Two forms are for non-owners of the structure. HO-4 (Contents Broad / renters) covers a tenant's personal property and liability but not the building, which the landlord insures. HO-6 (Unit-Owners / condo) covers a condominium owner's personal property, improvements and betterments, and liability, coordinating with the association's master policy. There is no HO-1 in most states because the bare-bones basic form was largely withdrawn.

The practical decision tree the exam rewards: an owner-occupant of a one-to-four-family home who wants strong protection takes HO-3 (or HO-5 for the broadest); a renter takes HO-4; a condo owner takes HO-6; and an owner of an older home worth more to rebuild than to sell takes HO-8. Eligibility requires owner-occupancy for HO-2/3/5/8, tenancy for HO-4, and unit ownership for HO-6.

Worked scenario: a family owns and lives in a single-family home and wants open-peril coverage on the structure with named-peril on contents at standard cost. The correct form is HO-3. If they wanted open-peril on contents too, they would choose HO-5; if they rented instead, HO-4; and if their 1890s home cost far more to rebuild than its market value, HO-8. Matching occupancy and peril breadth to the form is the core homeowners-forms task.

Key Takeaways

HO-2 is named-peril on dwelling and contents; HO-3 (the common owner form) is open-peril on the dwelling but named-peril on contents; HO-5 is open-peril on both; and HO-8 pays functional/repair cost for older homes worth more to rebuild than to sell. HO-4 covers renters' contents and liability, and HO-6 covers condo owners' property, improvements, and liability. Eligibility turns on occupancy: owner-occupant (HO-2/3/5/8), tenant (HO-4), or unit owner (HO-6), with no more than four units.