An HO-8 policy is a specialized type of homeowners insurance that covers older or historically significant homes. Homes covered by HO-8 insurance may be constructed with outdated materials or have unique architectural features that may be unusually expensive to replace.
Since they represent a greater risk to the insurance provider, homes covered by HO-8 insurance typically do not qualify for standard homeowners insurance coverage. An HO-8 policy is more limited than other types of homeowners insurance but still provides vital protection.
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How HO-8 Homeowners Insurance Works
Homeowners insurance is designed to protect homeowners from financial losses related to their homes and personal property. An HO-8 insurance policy takes a unique approach to coverage, making it suitable for homes that do not meet standard insurance requirements.
HO-8 insurance typically offers the following:
- Dwelling Coverage: Dwelling coverage insures the physical structure of the home, including your roof, foundation, attached structures, and built-in appliances and systems.
- Other Structures Coverage: Other structures coverage protects structures on the property that are not attached to the main home, like garages and sheds.
- Personal Property Coverage: Personal property coverage insures personal property that has been damaged or stolen.
- Liability Coverage: Provides financial protection by covering legal and settlement fees if someone is injured on your property or if you’re found responsible for damaging someone else’s property.
- Medical Payments Coverage: Medical payments coverage offers coverage for minor medical expenses if a guest is injured on your property, regardless of who is at fault.
- Loss of Use Coverage: Loss of use coverage insures the cost of expenses such as temporary housing if your home becomes uninhabitable due to a covered peril.
While HO-8 policies offer the same basic categories of coverage as standard homeowners insurance, the primary difference lies in how claims are valued. HO-8 coverage is based on actual cash value instead of replacement cost. If the home is damaged by a covered peril, such as a fire, the insurance company factors in depreciation when calculating the reimbursement.
This results in a lower payment when compared to replacement cost coverage, particularly for older homes that have depreciated for a longer time.
Coverages
HO-8 insurance policies are named peril policies, meaning that a peril must be listed in the policy to be covered. The ten named perils included an HO-8 policy include:
- Fire or lightning
- Smoke
- Windstorm or hail
- Explosion
- Theft
- Vandalism
- Volcanic eruptions
- Riot or civil commotion
- Damage by aircraft
- Damage by vehicles
If damage occurs due to reasons not listed above, an HO-8 policy does not cover it.
Exclusions
HO-8 insurance policies typically include a list of perils that are specifically excluded from coverage. This includes:
- Wear and tear over time
- Intentional loss
- Neglect or maintenance issues
- Power failure
- Earthquakes or earth movement
- Pest infestations or mold
- War and government action
- Specific types of water damage (ex. flooding)
Types of Home Insurance Policies
When comparing homeowners insurance coverage options, it’s important to understand the various types of policies that are available. The chart below compares the key features of each type of policy, from HO-1 to HO-8. This comprehensive overview can help you identify the type of policy that is likely to be appropriate for your home and circumstances.
Home Insurance Form Categories | Dwelling Type | Named or Open Peril | Dwelling Coverage | Other Structures Coverage | Personal Property Coverage | Liability Coverage | Medical Payments Coverage | Loss of Use Coverage |
|---|---|---|---|---|---|---|---|---|
HO-1, or 10 Named Perils Insurance | Single-family home | Named | Yes | Varies | No | No | No | No |
HO-2, or 16 Named Perils Insurance | Single-family home | Named | Yes | Varies | Yes | Varies | Varies | Varies |
HO-3, or Standard Home Insurance | Single-family home | Open for dwelling, Name for personal | Yes | Yes | Yes | Yes | Yes | Yes |
HO-4, or Renter’s Insurance | Rental property | Named | No | No | Yes | Yes | Yes | Yes |
HO-5, or Open Perils Insurance | Single-family home | Open | Yes | Yes | Yes | Yes | Yes | Yes |
HO-6, or Condo Insurance | Condo, co-op, or townhome* | Named | Varies | No | Yes | Yes | Yes | Yes |
HO-7, or Mobile Home Insurance | Mobile home | Open | Yes | Varies | Yes | Yes | Varies | Yes |
HO-8, or Modified Coverage Home Insurance | Varies** | Named | Yes | Yes | Varies | Varies | Varies | Varies |
** Homes that are not eligible for standard home insurance policies; criteria may differ based on state and insurer
How Much Does HO-8 Insurance Cost?
The average cost of an HO-8 homeowners insurance policy is approximately $1,162 per year. However, there are a wide range of factors that can impact the actual cost a homeowner can expect to pay, including:
- Age and Condition of the Home: Older homes that need HO-8 coverage may have outdated electrical systems, plumbing, and construction materials, making them more susceptible to damage. The cost of replicating historical features or using specific materials for repairs can also increase costs. These potential costs create additional risk for the insurance company, which can result in higher insurance premiums.
- Geographical Location: Homes located in areas prone to natural disasters, such as regions with a high frequency of storms, may face higher premiums.
- Historical Value: If the home is a registered landmark or holds significant historical value, this can increase the insurance cost due to the specialized nature of repairs and restorations required to maintain its historical integrity.
- Coverage Limits and Deductibles: Higher coverage limits and lower deductibles typically result in higher premiums. Choosing a higher deductible can reduce the annual premium but results in higher out-of-pocket expenses when filing a claim.
- Safety Features and Upgrades: Installing modern safety features like fire alarms, burglar alarms, and updated heating systems can lower the risk profile of your home, potentially reducing insurance costs.
- Insurance Provider and Policy Options: Each insurance provider may have different pricing models and discounts. Shopping around and comparing quotes from multiple providers may help you find a cost-effective HO-8 policy.
- Claim History: Homeowners with a history of insurance claims may face higher premiums, as insurers may view them as a higher risk.
- Credit Score: In some states, insurers use credit scores as part of their rate-setting formula. In this case, a higher credit score could lead to lower premiums.
What This Means for You
Older or historic homes that might not qualify for standard coverage due to unique architectural features or outdated construction can typically qualify for an HO-8 insurance policy. HO-8 policies cover your home and personal belongings at their actual cash value, factoring in depreciation. This can lead to lower payouts when compared to a standard homeowners insurance policy that offers replacement cost coverage.
While HO-8 coverage offers protection against a limited set of named perils, it provides a safety net for homeowners. An HO-8 policy helps to protect the historical integrity of your home and your financial investment. The cost of an HO-8 policy can vary based on a wide range of factors, such as the age, condition, location, and historical value of the home.
Shopping around for coverage, installing modern safety features, or choosing a higher deductible can potentially reduce the cost of coverage. If you’re unsure whether an HO-8 policy is appropriate for your home, it may be helpful to consult with a qualified insurance agent.