An HO-8 policy , also called a modified coverage form , is a type of homeowners insurance that is primarily designed for owner-occupied older homes or historic residences that otherwise wouldn’t qualify for coverage under a standard home insurance policy.
Insurance companies generally consider older homes to be higher risk since many are constructed with ornate features, outdated electrical work (like aluminum wiring) and building materials that are no longer common or up to code.
HO-8 policies are ideal if you’re intent on not making drastic renovations or upgrades to your home. You don’t need to pass a four-point inspection or make upgrades to your electrical wiring or plumbing to qualify for an HO-8 policy.
An HO-8 policy, also called a modified coverage form, is designed to cover older homes with outdated construction and custom features that may not qualify for standard coverage
You don’t need to pass an inspection or make upgrades to your home to qualify for an HO-8 policy
However, HO-8 insurance doesn’t cover as many hazards as a standard policy, and you’re only paid out for the actual cash value of your home or belongings, meaning depreciation is factored into your payout after a covered loss
HO-8 policies are designed to cover homes with outdated features or rare building materials. If your home falls into one of the below categories, you may need an HO-8 policy instead of standard homeowners insurance (also known as an HO-3 policy).
An older home, typically over 40 or 50 years-old
Historically landmarked home
A home designed with hard to find materials, like rare or outdated wiring, plumbing, or roofing
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An HO-8 policy contains the same types of coverage as a standard homeowners insurance policy, but it only covers your home and personal belongings at their actual cash value in the event of a loss.
That means if your home is damaged by a fire, depreciation would be factored into your claim reimbursement. If you had a standard homeowners policy in that scenario, you’d be paid out at the home’s replacement cost.
HO-8 policies also don’t cover as many causes of damage or loss as a typical home insurance policy. Under an HO-8 policy, your home and belongings are only protected against the following ten perils.
Fire or lightning
Windstorm or hail
Riot or civil commotion
Damage by aircraft
Damage by vehicle (not your own)
Below are the coverages that makeup an HO-8 policy:
Dwelling coverage - Covers damage to the structure of your home, including your roof, built-in systems and appliances, and any attached structures
Other structures coverage - Covers detached structures on your property, like a shed or garage
Personal property coverage - Covers the cost of damaged or stolen personal property
Loss of use coverage - Covers the cost of additional living expenses like temporary housing and restaurant meals while your home is being repaired or rebuilt after a covered loss
Personal liability coverage - Covers legal and medical fees if you’re found liable for bodily injury or property damage
Medical payments to others - Helps pay for a guest’s minor medical expenses if they are hurt in your home, regardless of who was at fault
Each coverage has a limit of liability, which is the maximum amount an insurance company will pay out for a covered loss. Certain types of personal property, like jewelry, will have their own sublimits.
An HO-8 policy will only cover the ten named perils mentioned above. That means unlike most home insurance policies, coverage for damage from weight of snow or ice or falling objects is not included in an HO-8 form.
There will also be a section of an HO-8 policy that outlines specific exclusions, or risks that will never be covered, such as:
Damage by earthquake and earth movement
Types of water damage, including flooding
Neglect or maintenance issues
Wear and tear over time
Pest infestations or mold
However, you may be able to add protection in the form of an endorsement to your HO-8 policy to get coverage for some excluded risks. For example, you may be able to add water backup coverage to your HO-8 policy to protect your home against sewer or sump pump backups.
You can also buy a standalone flood policy or a standalone earthquake insurance policy if you live in an area of the country that is at high-risk for either of those natural disasters.
An HO-8 policy is a type of homeowners insurance primarily meant to cover older or historic homes that may not qualify for a standard HO-3 policy. The two policies contain the same types of coverage for the structure of your home, personal property, and liability, but they differ in what perils they cover and how you’re paid out for claims.
HO-8 are named peril policies, meaning you’re only protected from the ten perils explicitly named in the policy. HO-3 policies are open peril, so you’re covered from most types of loss unless it’s explicitly listed as an exclusion. HO-8 policies tend to pay out actual cash value for covered claims and HO-3 policies pay out replacement cost.
Functional replacement cost (FRC) may be an option when insuring your home with an HO-8 policy. FRC policies don’t factor in depreciation like actual cash value policies, instead you’d receive a claim payout to repair your home, but with less expensive building materials. That means in the event of a loss, if you have an FRC policy your home won’t be rebuilt with the same antique or rare materials, but with cheaper, more modern replacements, like faux wood floors or drywall.
Older homes are typically more expensive to insure because insurance companies consider them to be "high risk". Older homes may be built with outdated, rare building materials that would be expensive or difficult to replace in the event of a loss. There's also a chance the roof, plumbing, or wiring isn't up to code either. Since the replacement cost value of an older home is so high, you're likely going to have higher insurance rates than you would with a more modern home.
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