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

The ISO Homeowners (HO) Program

The modern homeowners policy is built on the Insurance Services Office (ISO) Homeowners Program, most commonly the HO 2011 edition (the prior editions were HO 2000 and HO 91). A homeowners policy is a package policy: it combines Section I (property coverages on the dwelling, structures, and personal property) with Section II (liability and medical payments) in a single contract. The exam tests the form numbers, what each covers, and which one fits a given applicant — memorize the six forms cold.

The Six Homeowners Forms

Reading the Coverage Triggers

The single most-tested distinction is named perils vs. open perils (also called "all-risk" or "special"). Under a named-perils form, the insured must prove the loss was caused by a peril listed in the policy. Under an open-perils form, any direct physical loss is covered unless it is specifically excluded — the burden shifts to the insurer to prove an exclusion applies.

The HO-3 is the workhorse: Coverage A and B (dwelling and other structures) are written on an open-perils basis, while Coverage C (personal property) remains named perils. The HO-5 upgrades Coverage C to open perils too — that is the only structural difference candidates need.

HO-8 Modified Form and the Replacement-Cost Problem

The HO-8 exists for homes where the market value is far below replacement cost — older or historic dwellings where rebuilding with like materials would cost more than the house is worth. Without HO-8, an insurer would have to either charge a premium based on a $420,000 rebuild for a $180,000 house or decline the risk. HO-8 settles losses on a modified (functional) replacement cost or repair-cost basis using common modern materials (drywall instead of lath-and-plaster, dimensional lumber instead of ornate timber), not the original ornate finishes.

HO-8 also covers a narrowed basic-named-perils set: it drops several broad perils such as falling objects and weight of ice and snow, and theft coverage is limited to losses at the described location. Because the form is built to control moral hazard on over-valued older homes, it is the only owner form that never pays true replacement cost on the structure.

Eligibility Logic for the Six Forms

Underwriting eligibility is itself a tested topic. Each form is keyed to the applicant's insurable interest in the dwelling:

• HO-4 and HO-6 never insure the building structure on an open-perils basis; Coverage C (contents) is the heart of those forms.
• HO-6 Coverage A is a small "walls-in" / improvements-and-betterments limit (often a $5,000 default that can be increased), because the condominium association's master policy covers the building shell and common elements.
• Eligibility generally requires owner-occupancy (HO-2/3/5/8), tenancy (HO-4), or unit ownership (HO-6).
• Seasonal or secondary homes, vacant dwellings, dwellings rented to others, and farms with significant farming activity usually do NOT qualify for a homeowners form and move to a Dwelling (DP) policy or a farmowners program instead.

Package vs. Monoline and the Section Split

Because the homeowners policy is an indivisible package, the insured cannot buy Section I property coverage alone or Section II liability alone under a single HO form. That separation distinguishes the HO program from the monoline Dwelling (DP) policies, which carry no built-in liability. The package design also drives premium discounts and lets one declarations page, one deductible structure, and one set of conditions govern both halves.

When a question contrasts an HO-3 with a DP-3, the liability-and-medical-payments package element is usually the answer the writer is hunting for, along with the DP form's eligibility for non-owner-occupied and tenant-occupied dwellings.

Condominium and Tenant Forms in Detail

The HO-4 Contents Broad Form covers a renter's personal property on a named-peril basis, provides Coverage C, D (loss of use), E, and F, plus a small Coverage A building-additions-and-alterations allowance (commonly 10% of Coverage C) for improvements the tenant made. It does not insure the landlord's building.

The HO-6 Unit-Owners Form insures a condominium owner: Coverage C for personal property, a base Coverage A of $5,000 for owned interior elements ("walls-in"), plus loss assessment coverage. The condo association's master policy handles the structure under a "bare walls," "single entity," or "all-in" arrangement, and the HO-6 fills whatever gap the master policy leaves.

Eligibility Boundaries

Homeowners forms require an owner-occupant (or, for HO-4, a tenant). A dwelling held purely for rental to others, or with more than the permitted number of units/roomers, must instead use the Dwelling Program (DP). Farm exposures, incidental business beyond the permitted limits, and seasonal/secondary homes follow special rules. When a risk fails HO eligibility, the exam answer is almost always "write it on a Dwelling Policy" or add the appropriate endorsement.