A HO policy is a package policy consisting of fire, contents, theft and liability. The following HO forms are available: HO-2, HO-3, HO-4, HO-5, HO-6, HO-8
Who is eligible for a HO policy?
1) The owner occupant of a 1 to 4 family private dwelling.
2) Tenant in a private dwelling or apartment house.
3) The owner occupant of a condo or co-op.
HO-2 – Broad Form
This insured the dwelling, other structures and personal property for the perils of fire, lightning, E.C. Perils, VMM, the broad perils BIG AFFECT and also includes theft.
HO-3 – Special Form
This insures the dwelling and other structures on an all-risk basis, however, personal property, Coverage C, is only covered on a broad form basis.
HO-5 – Comprehensive Form
This insures the dwelling, other structures and personal property on an all-risk basis.
HO-8 – Modified Form
This insures the dwelling, other structures and personal property for the perils of fire, lightning, E.C. Perils, VMM, theft and glass breakage.
HO-4 – Tenants or Contents Broad Form
This is designed for the tenants of a rented premise. The HO-4 provides for 10% of Coverage C to cover improvements and betterments.
HO-6 – Unit Owner’s Broad Form
Designed for the condo and co-op. This covers personal property on a broad form basis and also provides a limited amount of Coverage A, dwelling, for additions and alterations. The minimum Coverage A is $1000.
Section 2 of Homeowners – All HO forms have identical Section 2.
Coverage E – Personal Liability – Any claim or suit brought against an insured for damages resulting from B.I. and/or P.D. caused by a covered occurrence, the company will pay up to the limit of liability shown in the declarations for any one occurrence. Minimum is $100K.
Coverage F – Medical Payments to Others
The company will pay the necessary medical expenses incurred w/in 3 years of an accident causing B.I. up to the limit of liability shown in the declarations for Coverage F.
This coverage is a “no-fault” coverage.
Minimum is $1000.
Coverage F is not additional insurance, it is included w/in the Coverage E limit.
Coverage C – Personal Property
This covers personal property owned or used by an insured worldwide for the entire amount applying to Coverage C.
The only exception to the worldwide limit is property usually kept at a secondary residence premises of the insured where coverage is limited to 10% of the Coverage C amount.
Limitations on Certain Classes of Personal Property –
1) $200 on money, bullion and coins.
2) $1500 on securities, accounts, manuscripts and stamps.
3) $1500 on watercraft and trailers.
4) $1500 for loss by theft of jewelry and furs.
5) $2500 for loss by theft of firearms.
6) $2500 for loss by theft of silverware, gold-ware and pewter-ware.
7) 5% of the dwelling amount for trees, plants, shrubs and lawns but not more than $500/item.
a. For the HO-4 and HO-6, the coverage is 10% of “C” but still not more than $500/item.
b. For the HO-8, the per item limit is only $250.
8) $2500 for property on resident’s premises used for business purposes. $500 for off-premise.
9) Gravemarkers are covered up to $5000. Cemetary plots are considered to be insured locations.
Recovered Property –
The insured has the option to retain recovered property or let it become property of the insurer.
Should the insured choose to retain recovered property, they need only payback the amount received for settlement.
All salvage and recovery losses are theft of the insurer.
Mandatory Coverage of Section 2 –
1) All additional residence premises
2) All residence employees not required to be covered under worker’s compensation.
3) Incidental office occupancies on residence premises.
Dwelling Property Program –
This program is designed to cover 1 to 4 family private dwelling.
It would also cover a 1 family w/up to 5 rooms or boarders.
There are 3 forms available:
1) DP 1 (Basic Form)
2) DP 2 (Broad Form)
3) DP 3 (Special Form)
The following insuring agreements are included in a standard DP form:
1) Coverage A – Dwelling – This covers the residential building, any structures attached to it, as well as materials and supplies at or next to the premises which is used for construction, alteration or repair of any structure at the location.
2) Coverage B – Other Structures – Other Structures not attached to the main structure and are at least separated by a clear space. Coverage is 10% of Coverage A.
3) Coverage C – Personal Property – This is optional coverage. If purchased, this would cover personal property owned or used by the insured. The coverage amount purchased is an on premises limit but the policy would provide for a worldwide limit of 10%.
4) Coverage D – Fair Rental Value – This provides compensation to the insured if the premises are unusable as a result of a covered loss or if use of the premises is restricted by the act of a civil authority. Coverage is 10% of Coverage A. *Civil authority losses are limited to 2 weeks in time.
5) Coverage E – Additional Living Expenses – This is optional coverage and is only available on a DP 2 and 3. Provides compensation to the insured for the increased living expenses when they are forced to live elsewhere under the same provision as Coverage D.
DP 1 – Basic Form
This insures the dwelling and other structures for the perils of fire, lightning, and internal explosion.
Endorsements – For additional premium, the insured may add the following coverages:
1) Extended coverage endorsement – E.C. Perils
Smoke – this broadens smoke coverage to include fires excluding fireplaces, industrial operations, and agricultural smudging.
Explosions – excludes steam boiler explosions
- This endorsement specifically excludes glass breakage.
DP 2 – Broad Form
This insures the dwelling and other structures for the same perils as a DP 1 and automatically includes E.C. Perils, VMM and Broad Form Perils:
Ice, Sleet & Snow
Accidental Discharge – covers leakage, overflow & a.d. from plumbing & heating systems
Electrical – covers damage to electrical appliances except tubes and transistors
Tearing Asunder – steam boiler explosions
For collapse, this covers a collapse caused by any of the following:
1) a peril in the policy
2) weight of rain on the roof
3) weight of contents, equipment, animals and people
4) hidden decay
5) hidden insects and vermin
6) defective building materials or methods of construction
*In a broad form policy or better, the following coverages are expanded:
- smoke includes fireplaces
- vehicles includes vehicles owned or operated by the insured or tenant
DP 3 – Special Form
This insures the dwelling and other structures on an all risk basis.
If personal property, Coverage C, has been purchased, that coverage is only on a broad form basis.
All risk coverage means coverage against loss caused by any accidental external circumstance subject to specific exclusions.
Additional Coverage in Dwelling Program –
1) Debris Removal – this states that the company will pay the cost of cleaning up the property after a loss, subject to a policy limit. These expenses are included w/in the limit of coverage for that loss.
2) Fire Dept. Service Charge – the limit of cover is $500.
3) Trees, Plants, Shrubs & Lawns – Under DP 1, no coverage. Under DP 2 and 3, coverage is provided on a named peril basis but excludes loss caused by wind, hail, weight of ice, sleet and snow and vehicle of insured or tenant. Coverage is in the amount of 5% of the dwelling amount as an aggregate total, but not more than $500 per item.
Loss Settlement in Dwelling Program – Under DP 1, losses are on a A.C.V. basis only. Under DP 2 and 3, buildings under Coverage A and B are at replacement cost w/out deduction for depreciation, provided the insured is carrying the sufficient amount of insurance. Personal Property Coverage C, will be on a A.C.V. basis only.
General Exclusions for DP 1, 2 and 3 –
1) Cost of repair, construction, or demolition regulated by any ordinance or law.
2) Earth movements unless a fire ensues.
3) Water damage, meaning flood and the backup of sewers or drains.
4) Neglect of property after a loss.
Property Not Covered Under DP 1, 2 & 3 –
1) Accounts, bills, deeds, evidences of debt, money, securities, bullion and manuscripts.
2) Animals, birds and fishes.
3) Aircraft and motor vehicles.
4) Boats, other than rowboats and canoes. Rowboats and canoes can be covered on-premises only.
* A DP 1 is designed for older dwellings, not considered eligible for replacement cost coverage.
* Functional replacement cost endorsement – this is for the replacement w/similar materials but of today’s standards
* Cancellations are as follows:
15 days for non-payment
30 days for any other reason
non-renewal cancellations are @ least 45 days but not more than 60
* The term all-risk has been replaced today by risk of direct physical loss or open perils.