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

The Insurance Services Office, abbreviated ISO, drafts and files the standardized homeowners forms that nearly every personal-lines insurer adapts. Each form carries a number and an edition reference such as HO 00 03 (the 2011 or 2022 edition of the Special Form). For the licensing exam, two facts about every form matter most: who the form is built for, and the peril basis it uses on the structure versus the contents.

A peril is the cause of a loss. Forms apply perils one of two ways. Named perils (also called 'specified' perils) cover a loss only if the cause appears on a written list, and the insured carries the burden of proof. Open perils (the form text says 'risks of direct physical loss' and the industry says 'special') cover any cause that is not specifically excluded, shifting the burden of proof to the insurer to show an exclusion applies.

The Current Homeowners Forms at a Glance

Exam note: HO-1 (Basic Form) still appears as a distractor but is withdrawn in most states. Treat it as wrong unless the question names it explicitly. There is no current standalone HO-7; mobile homes use a mobile-home endorsement to the homeowners program.

How the Forms Layer in Breadth

Think of the owner-occupant forms as a ladder of breadth:

• HO-2 (Broad Form): Both the dwelling and the contents are written on named perils. The insured must prove a listed cause for every claim. Lowest premium, narrowest protection.
• HO-3 (Special Form): Upgrades only the structure (Coverages A and B) to open perils; contents stay named. This is the answer to any 'most common' or 'standard' homeowners question.
• HO-5 (Comprehensive Form): Upgrades contents to open perils as well, so the entire policy is open-peril. Broadest unscheduled coverage, highest premium.
• HO-8 (Modified): Steps down from HO-3 to named perils on the structure and settles losses on a functional replacement cost basis for older homes.

The practical claim difference between HO-3 and HO-5 is contents. A laptop found cracked with no known cause is denied under HO-3 (insured cannot prove a listed peril) but generally paid under HO-5 (insurer must prove an exclusion).

Renters and Condo Owners

Not every applicant owns a freestanding house, so two forms drop the building:

• HO-4 (Contents Broad Form): For tenants. It covers personal property on named perils, loss of use, personal liability, and medical payments, but provides no Coverage A because the landlord insures the building. Tenant-installed improvements receive a small percentage of the Coverage C limit.
• HO-6 (Unit-Owners Form): For condominium owners. The condo association's master policy insures the building exterior and common areas; the HO-6 covers the unit interior, owner-installed improvements ('walls-in'), contents, and loss assessment (the owner's share of a master-policy deductible or shortfall). The base Coverage A limit is modest (commonly $5,000) and is raised by endorsement to match how much the master policy leaves to the unit owner.

Eligibility Rules

A homeowners policy is for an owner-occupant of a one-to-four-family dwelling used primarily as a private residence. Key eligibility points the exam tests:

1. The dwelling must be owner-occupied (HO-2/3/5/8) — non-owner-occupied rentals belong on a Dwelling Policy (DP form), not a homeowners form.
2. Incidental business (a home office, occasional babysitting) is acceptable; a full commercial operation is not.
3. Farms and ranches are ineligible and require a farmowners policy.
4. Mobile/manufactured homes require a mobile-home endorsement; they are not eligible for an unmodified HO-3.
5. A structure can usually have up to four families with up to two roomers or boarders per family.

Trap: A landlord who rents out a house cannot buy an HO-3 on it. The owner does not occupy it, so the correct product is a DP-3 dwelling form.

The HO Form Family at a Glance

The exam expects instant recognition of each ISO homeowners form and who buys it:

HO-3 and HO-5 are the workhorses; the difference is whether contents get open-peril treatment. HO-8 exists precisely because some older homes cost far more to reproduce than they are worth, so it settles on functional replacement and a restricted peril list.