Homeowners Forms HO-2 through HO-8 and Eligibility

The ISO Homeowners Program

The Homeowners policy is a package policy: it bundles Section I (property coverage on the dwelling and personal property) with Section II (personal liability and medical payments) into one contract. The current ISO program runs on the HO 2011 edition forms, though many states still use the HO 2000 edition. On the exam, you are tested on the form numbers and what each one does, not on edition dates.

Each form shares the same numbering: the base form is HO 00 0X, where the last digit is the form type. So HO-3 is filed as HO 00 03, HO-5 as HO 00 05, and so on. Memorize the six core forms and the insured each one is written for.

The Six Core Forms

The single most-tested distinction: HO-3 is open peril on the dwelling but named peril on contents, while HO-5 is open peril on both. "Open peril" (also called special or all-risk) covers any cause of loss not specifically excluded; "named peril" covers only the perils listed in the form.

What "Open Peril" Really Means

Under named-peril coverage, the insured has the burden of proving the loss was caused by a listed peril. Under open-peril coverage, the burden flips: the insurer must prove an exclusion applies to deny the claim. This burden-of-proof shift is why open peril is broader and costs more.

This is why a renter wanting the strongest protection on belongings cannot simply buy HO-4 (named peril on contents) and assume "all risk" coverage. To get open-peril on personal property in an owner form, the insured needs HO-5, or adds the HO 00 15 open-peril contents endorsement to an HO-3 (producing what agents call an "HO-3 with HO-15").

Eligibility Rules

Owner-occupied forms (HO-2, HO-3, HO-5, HO-8) require the dwelling to be a 1-to-4-family structure used principally for private residential purposes, and the named insured must occupy it. Incidental business or professional occupancy (a home office) is generally permitted.

• HO-4 requires the insured to be a tenant of an apartment or rented house, or an owner-occupant of a dwelling where someone else carries the building coverage.
• HO-6 requires the insured to own a condominium or co-op unit; the building is insured by the association's master policy.
• HO-8 is reserved for dwellings whose replacement cost substantially exceeds market value (older or architecturally unique homes), where standard replacement-cost settlement would over-insure the structure.

A dwelling with 5 or more families, or a building used primarily for business, falls outside the Homeowners program and must be written on a Dwelling Policy (DP) or commercial form instead.

The Homeowners Forms at a Glance

The ISO Homeowners program packages property (Section I) and liability (Section II) in one contract. Memorize each form's identity and peril basis:

The HO-3 split (open on building, named on contents) is the single most tested fact in personal lines.

Eligibility Rules

Eligibility questions hinge on occupancy and structure type. Owner-occupant one-to-four family dwellings qualify for HO-2, HO-3, HO-5, and HO-8. HO-4 is for tenants who do not own the building, and HO-6 is for condominium unit-owners who own only the interior "box" while the association insures the exterior. A dwelling held purely for rental to others does not qualify for a homeowners form - it belongs on a Dwelling Policy (DP). Incidental business use (a permitted home office) may be allowed, but a property primarily used as a business or a farm is ineligible and routes to commercial or farm forms.

HO-8 and the Functional Loss-Settlement Twist

HO-8 (Modified) exists for older or historic homes whose replacement cost vastly exceeds market value - a 100-year-old home with ornate plaster and stone that would cost a fortune to duplicate. To prevent over-insurance and moral hazard, HO-8 settles building losses on a functional replacement / repair-cost basis using modern common materials rather than exact restoration, and it covers a narrower named-perils list than HO-2. A frequent exam item asks which homeowners form fits a 90-year-old Victorian whose rebuild cost far exceeds its sale price; the answer is HO-8.