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

The ISO Homeowners Program

The Homeowners (HO) program is built on standardized ISO forms. Most insurers file the ISO HO 2011 edition (with HO 2000 and HO 1991 editions still appearing on exams). Each form is a complete, self-contained package combining Section I (property) and Section II (liability). The form number you select drives the perils covered, the eligibility class, and the valuation basis. Knowing which form fits which insured is one of the most heavily tested concepts on the national portion.

The forms in the current program are HO-2, HO-3, HO-5, HO-4, HO-6, and HO-8. Note that HO-1 (the old basic form) was withdrawn from the ISO program and is no longer offered, though some study lists still mention it. HO-7 is not an ISO form number; do not confuse it with anything real.

What Each Form Covers

The critical distinction is named perils vs. open perils (special form) and whether that basis applies to the dwelling, the contents, or both.

Memory hook: HO-3 is the market workhorse - open perils on the structure, named perils on stuff. HO-5 upgrades the contents to open perils too. HO-8 is the only form that settles the dwelling on a modified/functional replacement or market-value basis rather than full replacement cost.

A useful exam ladder: HO-2 (named/named) sits below HO-3 (open/named), which sits below HO-5 (open/open). HO-4 and HO-6 are not part of this owner-occupant ladder - they are specialized forms for renters and condo owners and use the broad-form named perils on contents.

Eligibility Rules That Show Up on the Exam

• The dwelling must be the insured's primary residence, owner-occupied, and used principally for dwelling purposes (limited incidental business/office occupancy is permitted).
• HO forms cover 1-4 family dwellings. A duplex or up to a 4-unit building is eligible if the named insured occupies one unit; if owner-occupied and not exceeding limits, units rented to others are still allowed.
• HO-4 has no building coverage - it insures a tenant's personal property and provides liability and Loss of Use. Tenants who improve their unit get Building Additions and Alterations coverage (commonly 10% of Coverage C).
• HO-6 is for condominium unit owners. Coverage A (Coverage for the unit/'walls-in') has a low base limit (often $5,000) and is increased by endorsement; the condo association's master policy covers the building shell.
• HO-8 is for homes where replacement cost greatly exceeds market value (older or historic homes), so losses settle on a functional/modified basis to discourage over-insurance and arson incentives.

The Form Ladder and Who Qualifies

Fix the homeowners ladder in order. HO-2 (Broad) covers the dwelling and personal property on a named-peril basis. HO-3 (Special) — the most common owner-occupied form — covers the dwelling and other structures open-peril but keeps personal property named-peril. HO-5 (Comprehensive) is open-peril on both the structure and contents. HO-4 (Contents Broad / renters) insures a tenant's personal property and liability with no building coverage. HO-6 (Unit-Owners / condo) insures a condo owner's interest (improvements and personal property) above the association's master policy.

HO-8 (Modified) is for older homes where replacement cost far exceeds market value and settles on a functional/repair basis using basic perils.

Eligibility Rules the Exam Tests

Homeowners forms require owner-occupancy (except HO-4 and HO-6) of a one- to four-family dwelling, with the named insured living in the home; incidental business use is allowed within limits, but a true rental belongs in a dwelling policy. The number of permitted families, boarders, and roomers, and whether a seasonal or secondary home qualifies, are recurring stems.

When a risk fails eligibility — a tenant-occupied home, a dwelling under renovation, or a property of unusual value — route it to the dwelling program or a specialty market, and recall that the HO-8 exists precisely so historic homes are not over-insured to a replacement cost no one would rebuild.

Open Perils vs. Named Perils - Why It Matters

Under a named-perils form (HO-2), the insured must prove the loss was caused by a peril listed in the policy. Under an open-perils / special form (HO-3 dwelling, HO-5 throughout), all direct physical losses are covered except those specifically excluded - so the burden of proof shifts to the insurer to show an exclusion applies. This burden-of-proof reversal is a favorite exam trap.

The broad-form named perils (used in HO-2, and for contents in HO-3/HO-4/HO-6) number 16 perils, including fire/lightning, windstorm/hail, explosion, riot, aircraft, vehicles, smoke, vandalism, theft, falling objects, weight of ice/snow/sleet, accidental water discharge, freezing, and sudden artificial electrical damage, plus volcanic eruption. Memorize that flood and earthquake are never in any base HO form - they require separate policies or endorsements.