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Home insurance
Comparison Through
HO Series Insurance
Forms
The
ISO insurance forms
are commonly
referred to as the
HO series throughout
the insurance
industry. They help
define what types of
perils (risky
events) are covered
and which are
excluded. They also
help determine what
rules and
regulations apply,
and what other
limitations are
placed on the
policy. Under the
current standards,
homeowner’s
insurance is
available for 1-4
family dwellings.
There can’t be more
than two families or
two boarders
occupying any single
residence.
Although most
businesses and
commercial property
are excluded from
homeowner’s
insurance coverage,
there are a few
exceptions to the
rule. A homeowner
can include a day
care or home office
established for a
business or
profession, but the
dwelling must be
owner or renter
occupied and be used
primarily as a
private residence.
However, the homeowner’s policy doesn’t cover
professional liability if a home-based business is
set up. Separate professional liability must be
purchased. Also, this type of coverage for a
home business is usually not included in policies
for condominium or cooperative owners, and renters.
Although ISO has
many insurance forms
in this series, some
of them are used
more commonly than
the others. The HO
series forms most
commonly used for
homeowners and
renters are:
HO-1,
Basic Form: HO-1
provides basic
coverage of a home
against eleven named
types of perils.
The home’s contents
are usually covered,
but also must be
explicitly listed.
This type usually
includes
fire/lightning smoke
and wind/hail
damage, but excludes
floods and
earthquake damages.
The other perils
usually included
are:
vandalism/malicious
mischief, theft,
smoke, glass
breakage,
explosion/riot/civil
commotion, and
volcanic eruption.
Personal liability
and damages from
vehicles and
aircraft are also
included. Under the
newer HO 2000
series, HO-1 is
rarely used.
HO-2,
Broad Form: HO-2
basically just
broadens the
coverage from HO-1,
expanding the 11
perils into 17.
However, with HO-2,
the perils are
specifically listed
events that would be
covered rather than
more general event
coverage. If the
peril isn’t
enumerated, there is
no coverage for it,
but HO-2 usually
includes some living
expenses if the
dwelling is
uninhabitable.
HO-3,
Special Form: HO-3
is the most common
type used for
comprehensive
coverage of
single-family
dwellings. HO-3,
under the HO 2000
program, covers all
direct damage to the
home except the
specific named
perils that have
been excluded.
Earthquakes and
floods are usually
included on the
excluded list. The
home’s contents are
covered, but only on
a named peril basis
like the HO-2
policy.
HO-4,
Renter’s Insurance:
HO-4 is used by
tenants who wish to
insure their
personal property
against the same
perils
aforementioned for
the contents portion
of HO-2. The tenant
can be renting a
room, house, or an
apartment. Under
the HO 2000 series,
HO-4 includes
personal property
within and outside
the rented
dwelling. It also
includes liability
insurance of at
least $100,000 for
damage to property
of or injuries to
other people in the
rented dwelling. It
may cover some of
the structures
altered by the
renter to a limited
extent.
HO-5,
Premier: HO-5
basically has about
the same effect as
adding a HO-15
endorsement to a
HO-3 form. The
house and content
are covered from any
risks except those
that have been
specifically
excluded, such as
flood and
earthquake. HO-5
expands the HO-2 and
HO-3 restrictive
content policy into
open perils coverage
of personal
property. The only
personal property
excluded has to be
specifically listed
in the policy.
HO-6,
Unit-Owners Form:
HO-6 basically is a
modified HO-2 policy
which has been
specifically
designed for
condominiums and
cooperatives. It’s
made up of two
components for
insurance purposes.
The two components
are the building and
common areas, and
the property
specific to each
unit owner. HO-6 is
a named-perils type
policy that covers
certain
semi-permanent
structures, like
carpeting and
wallpaper. Built-in
appliances and
kitchen cabinets are
included but the
structure itself and
common areas are
excluded. It will
usually provide for
a payment of up to
$1,000 for a loss
assessment charge
not covered by the
insurance on the
realty.
HO-7,
Mobile Home: Ho-7
used to be for
mobile homes and
house trailers, but
under the HO 2000
series, there are no
longer any HO types
that cover these.
However, there are
other types of
insurance that will
cover mobile homes,
house trailers, and
seasonal homes.
HO-8,
Modified Coverage
Form: HO-8 is used
for homes that are
typically over 30
years old and are
owner-occupied homes
whose replacement
cost far exceeds the
property’s market
value. The coverage
is a modified form,
because insurers
will not insure a
home for more than
it’s worth. If they
did so, they would
be creating a moral
hazard. So
basically, the HO-8
pays what it would
cost to repair or
replace damaged
property using
commonly cheaper
construction
materials and
methods. This is
known as a
functional
replacement. For
instance, plywood
might be used to
replace hardwood
flooring and drywall
could be used to
replace plaster.
The policy also
limits theft
coverage to $1,000
per occurrence, and
only covers theft
from the main
residence.
In
summary, Ho-2, Ho-3,
and HO-5 are used
for fairly modern
homes, while HO-8 is
used for older
homes. HO-2, HO-3,
& HO-5 cover the
property’s other
physical structures
and their contents
for the same perils
that the main
dwelling is covered
for. HO-2 is the
most limited
coverage while HO-5
is the most
comprehensive. All
should provide for
living expenses if
the home is
uninhabitable due to
damage from a
covered peril.
A
2006 poll conducted
by Insurance
Research Council
found that 43% of
renters and 96% of
homeowners had
insurance. However,
another research
study conducted by
Marshall & Swift/Boechk
found 66% of homes
were underinsured
and 18% were
undervalued in
2007. Many were
underinsured simply
because the owners didn’t
know what type of
home insurance was
available in the
United States. |