Homeowners Forms HO-2 through HO-8 and Eligibility
Key Takeaways
- HO-3 is the most common form: open perils on the dwelling, named perils on contents; HO-5 upgrades contents to open perils.
- HO-2 is named-peril on both dwelling and contents; HO-8 uses limited perils plus functional/repair-cost settlement for older homes.
- HO-4 (tenant) has NO Coverage A; HO-6 (condo) provides only a $5,000 base Coverage A for walls-in items.
- Homeowners forms require an owner-occupied 1-to-4 family dwelling; farms, hotels, and vacant buildings are ineligible.
The ISO Homeowners Program
The modern personal homeowners market is built on the ISO Homeowners Policy Program. The most widely used edition on state licensing exams is the HO 2011 program (ISO forms HO 00 02, HO 00 03, HO 00 05, HO 00 04, HO 00 06, HO 00 08), which replaced the older HO 1991/2000 editions in most states. Each policy is one integrated contract containing Section I (Property) and Section II (Liability), plus a Declarations page and any endorsements.
The form number tells you two things at once: how the dwelling and personal property are covered (named-peril vs. open-peril) and whether the form is meant for an owner-occupant, a tenant, a condo unit-owner, or an older home. Memorizing the six core forms and their peril basis is the single highest-yield task for the national exam.
The Six Core Forms
| Form | Name | Dwelling (Cov A) | Contents (Cov C) | Typical insured |
|---|---|---|---|---|
| HO-2 | Broad Form | Named peril (16) | Named peril (16) | Owner-occupant |
| HO-3 | Special Form | Open peril | Named peril (16) | Owner-occupant (most common) |
| HO-5 | Comprehensive | Open peril | Open peril | Owner-occupant (premium) |
| HO-4 | Contents Broad (tenant) | None | Named peril (16) | Renter/tenant |
| HO-6 | Unit-Owners (condo) | $5,000 (Cov A) | Named peril (16) | Condo owner |
| HO-8 | Modified Coverage | Named peril (limited) | Named peril (limited) | Older/historic homes |
The HO-3 is by far the most common form sold in the U.S. and is the default mental model: open perils on the structure, named perils on contents. The HO-5 upgrades contents to open perils as well, so a high-value client who wants "all-risk" personal property buys an HO-5, not an HO-3.
Forms with No or Limited Dwelling Coverage
- HO-4 (Tenant/Renter): has no Coverage A because the tenant does not own the building. The landlord insures the structure. The HO-4 insures Coverage C (personal property) on a named-peril basis and provides Section II liability. "Building additions and alterations" made by the tenant are covered up to 10% of the Coverage C limit.
- HO-6 (Condominium Unit-Owner): provides a small base Coverage A limit of $5,000 for interior "walls-in" improvements, fixtures, and built-ins that the unit owner is responsible for; this can be raised by endorsement. The condo association's master policy covers the building shell. Coverage C is named peril.
- HO-8 (Modified Coverage): designed for older homes where the market value is well below replacement cost (e.g., an ornate historic house). It limits perils to a basic group and, most importantly, settles dwelling losses on a functional/repair-cost (ACV-style) basis rather than full replacement cost, preventing over-insurance.
Eligibility Rules
Homeowners forms apply to owner-occupied 1-to-4 family dwellings (HO-2, HO-3, HO-5, HO-8). Key eligibility limits tested on the exam:
- The dwelling may not be used for business, except for permitted incidental occupancies (a small home office or a one- or two-family rental of part of the premises).
- A property with more than the eligible number of units, a hotel/boarding house, or a vacant building is not eligible and must use a Dwelling (DP) policy or commercial property form instead.
- Farms and ranches are excluded from the homeowners program (use a Farmowners policy).
- Seasonal/secondary dwellings can be written but underwriting may restrict the form.
Trap: A renter who wants to insure the building cannot — they have no insurable interest in the structure, so the HO-4 has no Coverage A by design.
A client owns a high-value home and wants 'all-risk' (open-peril) coverage on BOTH the dwelling and personal property. Which form should you recommend?
Which homeowners form is specifically designed for an older home whose market value is far below its replacement cost and settles dwelling losses on a repair/functional basis?
HO-3 vs. HO-5: The Coverage C Difference
The two most-tested forms are HO-3 and HO-5, and the exam hinges on how Coverage C (personal property) is written:
| Feature | HO-3 (Special) | HO-5 (Comprehensive) |
|---|---|---|
| Coverage A/B dwelling | Open peril | Open peril |
| Coverage C contents | Named peril (broad form perils) | Open peril |
| Burden of proof on contents | Insured proves a listed peril | Insurer must prove an exclusion |
| Relative cost | Lower | Higher |
HO-3 is the market standard; HO-5 upgrades contents to open peril. HO-8 (modified) is for older homes where market value is far below replacement cost — it settles dwelling losses on a functional/repair basis (common-construction materials) and restricts theft to on-premises, reflecting the home's age and historic features.
Trap: HO-3 already gives the dwelling open-peril coverage — the upgrade to HO-5 only changes Coverage C to open peril.
How does the HO-5 form primarily differ from the HO-3 form?
Form-by-Form Quick Reference and Eligibility Pitfalls
Memorize each form's purpose so you can match a scenario to the right policy:
| Form | Use | Coverage character |
|---|---|---|
| HO-2 (Broad) | Owner-occupied home | Named peril, dwelling + contents |
| HO-3 (Special) | Owner-occupied home (most common) | Open peril dwelling, named peril contents |
| HO-4 (Contents/Renters) | Tenant | Contents only, no dwelling (Coverage A) |
| HO-5 (Comprehensive) | Owner-occupied home (premium) | Open peril dwelling and contents |
| HO-6 (Condo unit-owner) | Condo owner | Contents + limited unit interior (Coverage A small) |
| HO-8 (Modified) | Older/historic home | Functional/repair-cost dwelling settlement |
Eligibility hinges on owner-occupancy for HO-2/3/5/8. A renter uses HO-4; a condo unit owner uses HO-6, where the association's master policy covers the building shell and HO-6 covers contents plus improvements/betterments. Homes used substantially for business, vacant, or non-owner-occupied generally fall to the dwelling program instead.
Exam tip: HO-4 and HO-6 have little or no Coverage A; HO-8 settles the dwelling on a functional/repair basis because market value of an older home is far below modern replacement cost.