HO8 policy

What homeowners need to know about the HO8 policy

The HO8 policy is usually reserved for owner-occupied homes with an actual cash value (ACV) that’s less than what it might cost to replace the damaged structure. This means that a claim payout for properties insured on an HO8 form usually subtract for depreciation, deterioration, and obsolescence.

The actual cash value amount is usually much lower than the replacement cost (RCV), so your insurance company pays less after a loss. That keeps the overall cost of the HO8 policy down.

In addition to insuring the structure of the home, an HO8 policy also offers other important coverages for:

• Personal liability

• Other structures 

• Additional living expenses and loss of use 

• Third-party medical expenses

• Personal property

Who needs an HO8 coverage

Insurers typically use HO8 forms to insure:

• Older homes, especially ones more than 40 years old.

• Registered landmarks.

• Architecturally significant homes.

• Homes constructed of hard-to-replace materials.

What does an HO8 policy cover?

The HO8 form is a named-perils policy. Like an HO1, an HO8 only covers a loss if it’s caused by one of the 10 events listed in the policy. Depending on the policy form, the perils that are typically covered are:

• Fire or lightning

• Windstorm or hail

• Explosion

• Riot or civil commotion

• Damage from aircrafts

• Damage from vehicles

• Sudden and accidental damage from smoke

• Vandalism or malicious mischief

• Theft

• Volcanic eruptions

States can also require some additional coverage. For instance, Florida state law mandates that all homeowners insurance cover catastrophic ground collapse. In general, the 10 perils listed above represent some of the most common claims a homeowner may face. 

But an HO8 policy can’t cover every risk. Most don’t cover several  perils that can cause large losses, such as:  

• Water damage. Few home insurance policies cover water damage from flood, but HO8 also excludes damage caused by a burst pipe or other sudden and accidental events. For that, you may want an HO3 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 earthquakes.

• Falling objects. HO8 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.

Most HO8 policies also exclude coverage for damage caused by:

• Ordinance or law

• Civil authority

• Nuclear hazard

• War and military action

• Power failure

• Bacteria, fungi, wet rot, or dry rot

• Byproducts of a growing, processing, or production operation involving a controlled substance

• Diminution of value

When considering an HO8 policy, be sure to tell your agent about your home and the risks you face. They can help you choose the type of home insurance that fits you.

HO8 vs HO3: What's the difference? 

HO8 and HO3 policies differ in subtle ways, namely in what perils are covered and how losses are settled. 

At a glance: HO8 vs HO3

Insurance options for older homes

HO8 policies are typically used in lieu of HO3 policies for older homes that aren’t eligible for a standard policy. If your home is historic or very costly to replace, the modified form HO8 is a great option.

If your home has unique features that are hard to replace, like artisan carvings or plaster moldings, it may be equally hard to insure because most insurance companies won’t pay what it costs to replace these features to their previous condition if you have a loss. With the HO8, you can cover your home and belongings.