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 potentially outweigh the market value.
What Homeowners Need to Know about the HO-8 Policy
The HO-8 policy is usually reserved for owner-occupied homes when 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.
HO-8 policies may subtract 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
What Perils Does an HO8 Policy Cover?
The HO-8 form is 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
- Riots or civil commotion
- Damage from aircrafts
- Damage from vehicles
- Malicious mischief or vandalism
- 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.