4.1 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 personal liability coverage (Section II) into a single contract. The standardized forms are filed by the Insurance Services Office (ISO); most state exam questions track the HO 2011 edition (with the HO 2022 revision in some states), but the form numbers and their fundamental scope have been stable for decades. Memorize the form numbers, their official names, and—above all—whether each insures the dwelling and contents on a named-peril or open-peril (also called "all-risk" or "special") basis.

The Six Core Forms

Eligibility is the first filter. The HO program is for owner-occupants of 1-to-4-family dwellings (with HO-4 and HO-6 the exceptions for tenants and unit-owners). Property held primarily for business, farm exposures, and dwellings with more than four units or more than one boarder belong in a Dwelling Fire (DP) or Commercial policy, not the HO program.

How to Read the Form Differences

The single most-tested distinction is HO-3 vs. HO-5. Both cover the dwelling (Coverage A) on an open-peril basis, meaning all causes of loss are covered unless specifically excluded. The difference is the personal property (Coverage C): HO-3 insures contents on a named-peril (broad) basis, while HO-5 upgrades contents to open peril. HO-5 is the broadest residential form sold.

HO-2 is broad named-peril on both the dwelling and contents—a step down from HO-3. HO-8 is the narrowest: it uses the basic named-peril list (only the original perils, e.g., no falling objects or weight of ice/snow) and is designed for homes where market value is far below replacement cost (older or registered-historic homes), which is why it settles losses on a functional/repair-cost basis rather than full replacement cost.

Tenant and Unit-Owner Forms

• HO-4 (Renters): There is no Coverage A because the tenant does not own the building. Coverage C (personal property) is the primary coverage; Coverage D (Loss of Use) and Section II liability follow. Improvements a tenant makes are covered up to 10% of the Coverage C limit as an additional amount.
• HO-6 (Condo Unit-Owners): Coverage A is for the unit-owner's interest in alterations, appliances, fixtures, and improvements inside the unit ("betterments"), with a base limit of $5,000 that can be increased. The condo association's master policy covers the building structure; the HO-6 fills the gap ("walls-in" coverage).

Eligibility and Underwriting Filters

Beyond owner-occupancy, several conditions move a risk out of the HO program. A dwelling used more than incidentally for business, occupied by more than two roomers or boarders per family, or held primarily for rental to others belongs in a Dwelling (DP) policy instead. Seasonal and secondary homes can be written but often require a special endorsement and may default to ACV settlement. Mobile and manufactured homes are not eligible for the standard HO forms—they are covered under a separate mobilehome program (MH endorsement to HO-2/HO-3) or a stand-alone manufactured-home policy.

Recognizing these eligibility cutoffs is a frequent multiple-choice topic because it determines which policy family even applies.

Why Form Selection Matters for Premium

The peril basis drives both coverage breadth and price. Open-peril coverage (HO-3 dwelling, HO-5 everything) costs more because the insurer accepts the burden of proving an exclusion and covers a wider universe of losses. Named-peril forms (HO-2) cost less but transfer proof and gap risk to the insured. A producer's job is to match the client's exposure and budget: a high-net-worth client with valuable contents benefits from the HO-5's open-peril contents coverage, while a renter needs only the HO-4.

Selecting an HO-8 for a newer home would underinsure replacement cost; selecting an HO-3 for a historic home could leave the insured paying for an inflated, code-driven rebuild they did not want.

Homeowners Forms at a Glance

The ISO Homeowners (HO) program packages property (Section I) and liability (Section II) into one policy for owner-occupants, condo owners, and tenants. The exam expects instant recall of each form:

Eligibility generally requires owner-occupancy (HO-2/3/5/8), with limits on the number of families and on incidental business use. Farms, mobile homes, and rental dwellings are not eligible and use the dwelling program or specialty forms.

Exam trap: HO-8 uses ACV/functional replacement, not full replacement cost, precisely because older homes (Victorian, masonry, historic) cost far more to reproduce than they are worth on the market - insuring at full RC would overpay relative to indemnity. HO-4 and HO-6 have no/limited Coverage A because the tenant or condo association owns the structure.