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What is an HO-8 insurance policy?

Fact-checked with HomeInsurance.com

Older homes can present major challenges from a homeowner’s perspective. Typically they require constant maintenance to prevent small problems from escalating into major repairs. Repairing some older homes requires finding special materials and workers who specialize in building techniques from past decades. 

When it comes to insurance, older homes often present difficulties as well. Older homes that have undergone few, if any, renovations often don’t qualify for the most common types of homeowners insurance. But one type of home insurance – the HO-8 policy – provides protection for historic structures that some lucky owners call home.

What is HO-8 insurance?

An HO-8 homeowners insurance policy – sometimes referred to as the modified coverage form – is a special type of home insurance designed for owner-occupied older homes. 

HO-8 coverage is a “named-perils” policy. The term “perils” means a type of action or force that can cause a loss. In a named-perils policy, the insurer specifies the perils that the policy will cover. HO-8 policies cover losses caused by 10 specific perils, including:

  • Aircraft
  • Civil unrest and riots
  • Explosions
  • Hailstorms and windstorms
  • Lightning and fire
  • Smoke
  • Theft
  • Vandalism and malicious mischief
  • Vehicles
  • Volcanic eruptions

HO-2 and HO-3 homeowners policies, in contrast, cover conventional homes. HO-2 and HO-3 policies cover damages caused by the same perils as the HO-8, plus six additional perils, including:

  • Accidental steam or water discharge
  • Accidental, sudden destruction of a home system
  • Falling objects
  • Frozen home systems
  • Power surges
  • Weight of sleet, snow or ice

Besides covering fewer perils, HO-8 policies also fall short if a covered disaster destroys your home. Your home has a market value and a rebuild cost. For example, your home may have a $350,000 market value, but you could rebuild it for $200,000. 

Conventional homeowners policies provide enough dwelling coverage to completely rebuild your home. But most HO-8 policies only pay the actual cash value of your home, which is oftentimes much less than its rebuild cost.

Who needs HO-8 insurance?

HO-3 policies are the most common type of homeowners insurance. But if you own an older home, it might not qualify for the comprehensive protection a conventional home policy offers. Many older homes fail to qualify for HO-3 coverage because they have original electrical wiring, heating and air conditioning systems and plumbing. Outdated systems like these can disqualify an older home because they require more money to rebuild to current building codes. 

Older homes also pose higher risk to insurers because rebuilding them requires craftsmen that specialize in unconventional building methods and sourcing materials that are often difficult to find. For instance, rebuilding an older home may require replacing lath and plaster walls or recreating decorative trim.

Generally, HO-8 policies cover dwellings 40 years of age or older, along with historic homes and houses on the National Register of Historic Places. Sometimes homeowners choose HO-8 policies because they don’t qualify for HO-3 coverage due to a bankruptcy or history of bad credit.

What does HO-8 insurance cover?

Typically, HO-8 policies provide the same coverages as conventional homeowners policies, including:

Dwelling

Dwelling coverage pays to repair or rebuild your home following a covered loss. But remember, HO-8 policies don’t cover as many perils as HO-3 policies do. While an HO-8 policy would help pay repair costs following a fire, it wouldn’t cover damage caused by an object smashing through your roof. Dwelling coverage in the event of a total loss would amount to actual cash value only with an HO-8 policy as well.

Loss of use

When a covered loss causes significant damage to your home, you may need to relocate while it is being repaired. Loss of use coverage helps pay living expenses such as hotel rooms and meals. Typically, loss of use coverage only pays the difference between your usual expenses and your post-loss costs. For example, if your monthly mortgage payment costs $1,200 and your temporary housing costs $3,000 per month, your loss of use coverage can help pay the additional $1,800, minus deductible and based on coverage limits.

Medical expenses of others

This type of coverage helps pay the medical expenses of a guest if they sustain an injury on your property. However, medical payments to others doesn’t cover the medical expenses of people within your household — that is typically accounted for separately from this coverage.

Other structures

When a covered peril causes damage to structures on your property that aren’t attached to your home, like a fence, garage or guest house, your other structures’ coverage can help pay the repair or rebuild costs.

Personal liability

Homeowners often face legal expenses when someone sustains an injury on their property or when they are legally liable for damage to another person’s property. For instance, if a tall tree in your backyard falls and damages your neighbor’s home, you’ll face the responsibility of repairing the house and the possibility of a costly lawsuit. Personal liability coverage can help pay all these expenses.

Personal property

Following a covered loss, personal property coverage helps replace the things that make your house a home, like appliances, electronics and furniture. Most standard policies only provide actual cash value personal property coverage, which pays the depreciated value of your belongings. However, many insurers offer optional replacement cost coverage, which pays to replace your items at current prices.

What does HO-8 insurance not cover?

HO-8 policies won’t cover losses caused by perils not named, including:

Earthquake damage

Standard HO-8 policies won’t cover damage to your home or personal property caused by an earthquake. However, many major insurance carriers offer optional earthquake insurance. If your home sits on or near a fault line, ask your insurance provider about earthquake insurance.

Falling objects

Although HO-3 policies cover damages caused by falling objects, HO-8 policies exclude this cause of loss. If a tree branch falls on your home during a windstorm, your HO-8 policy will likely pay the repair costs, because windstorms are a covered peril. But, if the limb falls when the weather is calm, an HO-8 policy won’t pay, because falling objects aren’t included as a covered peril.

Flood damage

HO-8 policies don’t typically cover damages caused by floods. Many providers offer separate flood insurance policies, which you can add to supplement your HO-8 policy. If your insurer doesn’t offer flood insurance, you can purchase it through the National Flood Insurance Program.

Water damage

Burst pipes, ruptured hot water heaters and clogged drains are common causes of water damage. While an HO-3 policy covers perils that often cause water damage, HO-8 policies do not.

Winter-related damages

When ice and snow accumulate on top of a home, it can cause major roof damage. Likewise, frigid winter temperatures can cause water pipes and heating and air conditioning systems to freeze. However, HO-8 policies don’t cover losses caused by these common winter perils.

How much HO-8 insurance do I need?

Before purchasing any type of homeowners policy, calculate the amount of liability and personal property coverage you need. Start by taking a home inventory:

  • Going room to room, catalogue all your personal property.
  • Determine how much it would cost to replace all your belongings at today’s prices.
  • Add up the replacement costs of all your personal property to determine the amount of coverage you need.

By default, most insurers offer $100,000 to $300,000 in personal liability coverage. But most providers allow you to increase your liability and medical payments coverages to suit your needs. 

If your home has features such as a hot tub, swimming pool or treehouse, consider raising your liability limit. Even if you don’t entertain guests often, you need to increase your liability coverage to offset potential risks. Insurers also offer personal umbrella policies, which help pay liability costs that exceed the limit of your HO-8 policy.

When you purchase a homeowners policy, the insurer will likely determine your home’s rebuild value. However, if you make major home improvements, like installing a new roof or building an addition, contact your insurance agent to adjust your policy’s rebuild value.

Choosing an HO-8 insurance policy

Homeowners policies don’t come in one-size-fits-all coverage packages. When shopping for home insurance, consider your individual needs. Determine whether you need to add replacement cost coverage to protect items such as computers, sound systems and TVs.

People who have a home office may need to add optional coverage to protect computers and telecom equipment. Most insurers set limits on the amount they will pay for certain types of belongings. For example, a provider may limit computer coverage to $2,000. For some home-based businesses, this may need to be supplemented with additional coverage levels.

Always look for an insurer that offers good discount programs. Most major providers offer discounts for bundling auto and home policies, and some offer discounts for not filing a claim for a specified period, or for consistently paying your bill on time. You can also find a wide array of discounts for installing safety and security devices and making home improvements.

The takeaway

  • HO-8 policies provide coverage for older homes (40 years or older, typically).
  • HO-8 home insurance doesn’t cover as many perils as HO-3 policies.
  • HO-8 policies typically pay the actual cash value of your home, often not enough to cover all rebuild costs.
  • HO-8 policies don’t cover earthquake or flood damage, or common damages caused by winter storms.

HO-8 policies don’t provide the most comprehensive home insurance protection as it y covers fewer perils than the more popular HO-3 policy and usually doesn’t provide enough coverage to rebuild your home. HO-8 policies are a good choice for people who own older homes, with original home systems, and homes on the historic register.

Typically, HO-8 policies provide the same coverages as HO-3 policies, including dwelling, medical payments, other structures, personal liability and personal property coverages. The amount of coverage you need may depend on the value and replacement costs of your personal belongings, along with your home’s features. Major insurance carriers offer several types of optional coverages to maximize your liability coverage and protect your most valuable possessions.

Michael Evans

Michael is an insurance writer for Coverage.com. He began writing professionally in the 1990s while working for the world’s first online mortgage broker, and today specializes in education, finance and retiring abroad. Michael has contributed to numerous digital and print publications, including Bankrate, Fox Business, International Living and Yahoo Finance, and is the author of Escape to Colombia, 1st Edition, a comprehensive guide to retiring to Colombia.

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