HO-8 Policy

An HO-8 policy, also called the modified coverage form, is home insurance for older buildings where the replacement costs outweigh the market value.

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What Is an HO-8 Form?

HO-8 policy, also called the modified coverage form, is home insurance for older buildings where the replacement costs outweigh the market value. As a result, the policy is written on an actual cash value (ACV) basis.

What Homeowners Need to Know about HO-8 Policy

The insurance industry uses standardized forms to write homeowners insurance. The HO-8 policy, or modified form, is usually reserved for owner-occupied homes with an actual cash value (ACV) is less than what it might cost to replace the damaged structure. Insurers typically use HO-8 forms to insure:

  • Older homes, especially ones more than 40 years old.
  • Registered landmarks.
  • Architecturally significant homes.
  • Homes constructed of hard-to-replace materials.

As an actual cash value policy, HO-8 subtracts depreciation when it pays out for damage. That cost is usually much smaller than the replacement cost, so your insurance company pays less after a loss. That keeps the overall cost of the HO-8 policy down. The policy also offers other important coverages for:

  • Personal liability
  • Third-party medical expenses
  • Personal property

But HO-8 is also a named-perils policy. Like HO-1, HO-8 only covers a loss if it’s caused by one of the 10 events listed in the policy. These events, or perils, are:

  • Fire or lightning
  • Hail or windstorms
  • Explosions
  • Riots or civil commotion
  • Damage from aircrafts
  • Damage from vehicles
  • Smoke
  • Malicious mischief or vandalism
  • Theft
  • Volcanic eruptions

These perils represent some of the most common claims a homeowner may face. However, an HO-8 policy does not cover other perils that can cause expensive damage, such as:

  • Water damage. Few home insurance policies cover water damage from flood, but HO-8 also excludes damage caused by a burst pipe or other sudden and accidental events. For that, you may want an HO-3 policy.
  • Earthquake. There are no standard home insurance policies that cover earth movement of any kind. Typically, homeowners look for additional coverage specially designed for earthquake.
  • Falling objects. HO-8 does not provide coverage for falling objects, like a tree branch crashing through your roof, unless you can prove the object fell because of one of the 10 covered perils.  

When considering an HO-8 policy, be sure to tell you agent about your home and the risks you face. They can help you choose the policy that fits you.

Does My Home Need an HO-8 Policy?

You may need an HO-8 policy if you own an older home that may be difficult to rebuild after a catastrophe. For example, imagine you own a Victorian home. Its unique and historic traits add to the home's charm and value, but may be difficult to replace these days given how drastically construction techniques and materials have changed. Restoring your home to its original state after a major storm can be expensive. And choosing modern materials may actually reduce the home's value. 

Luckily, this is the situation HO-8 is designed for. If your home is older or has historic or architectural value, an HO-8 policy may be the right choice for you.

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