What Form Should Agents Use to Write Homeowner's Insurance?
Homeowner’s Insurance has become fairly standardized throughout the industry. The ISO forms are divided into categories based on the type of residences and perils they protect.
For example, most single-family homes require HO-3 or HO-5. HO-3 is a fairly broad form that covers an array of named perils. HO-5 is a more comprehensive form written on an open-perils basis.
Here's a brief overview of each type of form:
- HO-0 – Dwelling Fire Form. Homeowners who rent out their home or condo usually require this policy. It insures the physical structure of the home, but not the policyholder’s personal property, liability, or medical expenses. Sometimes lenders buy HO-0 for borrowers when their Homeowner’s Insurance policy lapses.
- HO-1 – Basic Form. HO-1 is a "named-perils" form, meaning it explicitly lists the types of events the policy covers. However, because it only lists 11 perils, most states no longer offer HO-1.
- HO-2 – Broad Form. HO-2 offers coverage for 16 listed perils, including all 11 on HO-1. Typical perils include fire, windstorm, and hail. If a peril isn’t listed on the form, it's excluded.
- HO-3 – Special Form. This is the most comprehensive coverage for single-family homes. It's an "open-perils" form, meaning it lists only the perils that are excluded. If a peril isn't explicitly listed, it's covered. However, the home's contents are usually covered on a named-peril basis.
- HO-4 – Contents Broad Form. Also called the tenants form, HO-4 is essentially Renter’s Insurance. It provides protection for personal property and covers the same perils as HO-2 or HO-3. It also includes liability coverage for third-party injuries and property damage.
- HO-5 – Comprehensive Form. This is similar to HO-3 except that the contents are covered on an open-perils basis.
- HO-6 – Unit-Owners Form. HO-6 is the Condo Insurance form. It covers the policyholder's personal property and the unit's walls, floors, and ceiling against all the perils in the HO-2 form.
- HO-8 – Modified Coverage Form. This is the form to use when insuring an older, owner-occupied home with a replacement cost that far exceeds the property's market value. It provides "functional replacement," meaning the insurer can replace damaged property with items that perform the same function even if they aren’t identical to the original.
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