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

The ISO Homeowners Program

The Homeowners (HO) program is published by the Insurance Services Office (ISO). Most carriers file the ISO Homeowners 2011 (HO 00 series) or the broadly similar 2022 revision. Exam questions almost always describe behavior from the HO 2011 edition, so learn that baseline and treat carrier endorsements as modifications to it.

A Homeowners policy is a package policy: it combines Section I (property) and Section II (liability and medical payments) into one contract for one premium. To be eligible, the named insured must have an insurable interest in the dwelling, and the structure must be used principally as a private residence (incidental occupancies like a home office are allowed).

The Six Standard Forms

The forms differ in two ways: which perils are covered (named-peril vs. open-peril/special) and who is eligible (owner-occupant, tenant, or unit-owner).

There is no HO-1 and no HO-7 in the current ISO program. HO-1 (basic named peril) was withdrawn in most states decades ago — a classic distractor on the exam.

Reading the Forms

• HO-3 is by far the most common owner-occupant form. Memorize its asymmetry: the dwelling and other structures get open-peril coverage (covered unless excluded), while personal property gets named-peril (covered only if the loss is one of the listed perils).
• HO-5 upgrades contents to open-peril too — the only standard form giving open-peril on both structure and contents.
• HO-4 (renters) has no Coverage A because the tenant does not own the building; the tenant's improvements/betterments are picked up under Coverage C up to 10%.
• HO-6 insures the unit-owner's interest: a minimum $5,000 Coverage A for walls-in/built-in items the association's master policy does not cover, plus loss assessment coverage.
• HO-8 is for dwellings whose replacement cost far exceeds market value (older/historic homes). It settles losses on a functional/repair-cost basis, not full replacement cost, and uses a restricted basic-peril list (no theft of property off-premises, limited theft on-premises).

Eligibility Traps

• A dwelling under construction is eligible for an HO policy if the insured intends to occupy it; otherwise use a Dwelling (DP) policy.
• A residence with up to two roomers/boarders per unit and no more than four families stays HO-eligible. A pure rental or a 5+ unit building is not eligible — that is a commercial or DP exposure.
• A seasonal/secondary dwelling can be insured on an HO form but is often written on HO-8 or a Dwelling form depending on occupancy and condition.
• Mobile/manufactured homes are not eligible for standard HO forms; ISO uses the MH (Mobilehome) endorsement (MH 04 01) attached to an HO-2 or HO-3.

The Forms at a Glance

Why HO-8 Exists and Other Eligibility Rules

HO-8 solves the over-insurance problem of historic homes whose market value is far below replacement cost: it settles on a modified/functional basis so the insured cannot profit from a total loss. HO-4 and HO-6 cover only personal property and the insured's interest in improvements, because the building (HO-4) or the master condo policy (HO-6) belongs to someone else. Eligibility generally requires owner-occupancy of a one- to four-family dwelling; a structure with more than four units or substantial business operations is a commercial risk.

Farms and mobile homes are excluded from the standard HO program and require their own forms or endorsements.

Number of Families and Secondary Locations

The HO program is built for owner-occupied one- and two-family dwellings; three- and four-family owner-occupied dwellings are eligible but require careful rating, and units the insured does not occupy are commercial risks. An insured who rents out part of the home (e.g., a basement apartment) can keep HO eligibility if the rental is incidental and the insured still occupies the dwelling. A secondary or seasonal residence can be covered by a separate HO policy or endorsed onto the primary policy. Cooperative apartment owners use HO-6-type coverage because they own shares, not real property.

Knowing which living arrangement maps to which form — and when a risk falls out of the HO program entirely into the Dwelling or commercial program — is a recurring multiple-choice pattern.