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

The ISO Homeowners Program

The Insurance Services Office (ISO) publishes the standardized homeowners forms that most personal-lines insurers file. Each form carries a number, and the exam tests two facts per form: who is eligible and the peril basis that applies to the dwelling versus the contents.

The most-tested edition family is the HO 2011 program (forms such as HO 00 03 05 11). You do not memorize edition dates, but you must know which form fits a given applicant on sight.

Forms at a Glance

Exam note: HO-1 (Basic Form) is withdrawn in most states. Treat it as a wrong distractor unless the question names it explicitly.

Open Perils vs. Named Perils

The peril basis decides who carries the burden of proof on a claim.

• Named perils (HO-2, HO-3 contents, HO-4, HO-6, HO-8): the insured must prove the loss came from a peril on the list.
• Open perils (also called special; HO-3 dwelling, all of HO-5): coverage applies to any cause except those specifically excluded, and the insurer must prove an exclusion to deny.

This single shift is why open-peril forms cost more and favor the insured.

Eligibility Rules That Trip Students

• Owner-occupancy is required for HO-2, HO-3, HO-5, and HO-8. A non-owner-occupied rental dwelling is ineligible and must use a Dwelling Policy (DP) instead.
• A property may contain up to four families and still qualify for many homeowners forms, but a pure investment/rental property does not.
• Renters never insure the building, so they take HO-4 (Coverage C, D, E, F only).
• Condo owners take HO-6: the homeowners-association master policy insures the building exterior, while HO-6 covers the unit interior, owner improvements, contents, and loss assessment.
• Manufactured/mobile homes are ineligible for HO-3; they require a mobile-home endorsement (historically the HO-7 designation).

A pure investment or rental dwelling is never eligible for any homeowners form and must be written on a Dwelling Policy or commercial program instead.

HO-8 and the Replacement-Cost Problem

A 1910 brick home with hand-carved molding may sell for $180,000 (market value) yet cost $450,000 to rebuild with identical craftsmanship (replacement cost). Insuring it on HO-3 would force an unaffordable Coverage A. HO-8 solves this by settling losses on a functional replacement cost / repair-cost basis using modern equivalent materials, and it is written on named perils.

Exam trap: For a historic home where replacement cost greatly exceeds market value, the intended answer is HO-8, not HO-3 or HO-5.

HO-3 — The Market Standard

HO-3 is the answer to almost any "standard" or "most common" homeowners question. It pairs open perils on the structure (Coverages A and B) with named perils on contents (Coverage C). This split keeps premiums below HO-5 while still giving broad building protection. When a fact pattern describes a typical single-family owner-occupant with no special hazard, choose HO-3.

HO-5 upgrades contents to open perils as well, so the insurer must prove an exclusion even for a mysterious damage claim to belongings. HO-5 costs noticeably more and targets higher-value homes whose owners want maximum protection on jewelry, electronics, and collectibles without scheduling each item.

The Condo Two-Policy Structure

For an HO-6 condo unit-owner, two policies always interact. The association's master policy can be written three ways, and each changes how much Coverage A (walls-in) the unit-owner needs:

• Bare walls / studs-in: association insures only the bare structure; the owner needs the most HO-6 Coverage A.
• Single entity: association covers original fixtures but not upgrades; owner insures improvements.
• All-in / all-inclusive: association covers most interior items; owner needs the least HO-6 Coverage A.

A producer who reads the master policy declarations can right-size the HO-6 building limit and the loss assessment coverage, a common applied question.

Homeowners Forms, Eligibility, and Form-Selection Traps

The ISO Homeowners program (form series HO 00 0x) offers a graded menu. HO-2 (Broad) covers the dwelling and contents on named perils; HO-3 (Special) is the most common owner-occupant form, insuring the dwelling open-peril and contents named-peril; HO-5 (Comprehensive) insures both dwelling and contents open-peril; HO-4 is the renters/contents form; HO-6 is for condominium unit-owners; and HO-8 (Modified) is for older homes, settling losses on functional replacement/repair cost rather than full replacement cost.

Eligibility traps: HO-3 and HO-5 require owner-occupancy of a 1-4 family dwelling; a landlord renting out the home needs a Dwelling Policy (DP) instead. Incidental business and certain home-sharing uses can void eligibility without an endorsement.

Scenario: A buyer purchases a 90-year-old Victorian whose replacement cost ($600,000) far exceeds market value ($300,000). HO-3 would demand insuring to full replacement cost; HO-8 is the correct fit because it settles on functional repair cost, avoiding over-insurance on ornate, hard-to-replace features.