The different types of home insurance policies may be called HO-3 and HO-8. Initials HO stand to signify homeowners. There are three types of coverage: standard homes, mobile/manufactured and condos.
An HO-8 policy typically covers coverage for older homes. You may not be eligible for a standard, more affordable HO-3 insurance policy just because your house is older. You can determine which policy is best for you by understanding the differences between them.
What is an HO-8 Policy?
Modified coverage forms are often used to describe a HO-8 policy. The unique feature of HO-8 insurance is that the repair/replacement costs may be greater than the home’s value. Many homes are older or more historic and can be covered. They might not have been updated in a long time, and may be out of compliance with modern standards. They may not be eligible for homeowners insurance coverage.
An HO-8 policy is ideal for those who have an older house or one that is more expensive to repair than they are worth when they sell it. However, this policy is not only for old houses. Modified coverage homeowners insurance policies are a good option if your home has high-end features or is architecturally important.
What is HO-8 insurance?
The coverage of an HO-8 policy is less than that of a standard homeowners insurance policy HO-3. Here’s a breakdown of the coverage included in an HO-8 policy.
Homes older than 40 Years
A HO-8 policy covers homes that are at least 40 years old. Older homes, such as those with outdated electrical wiring, may not be eligible for the standard HO-3 policy. Old wiring can make it difficult for older homes to be eligible for standard homeowners insurance.
Historic houses
If you own a historical home that may be listed in the National Register of Historic Places, an HO-8 may be the best option for home insurance. It is more costly to rebuild or repair historical homes. There are restrictions on what building materials can be used in historical areas. The work may require more skilled laborers and may result in higher costs.
Ten named perils
An HO-8 policy covers ten perils. The HO-8 policy does not provide as much coverage as the standard homeowners policy which covers 16 perils. Losses caused by:
- Aircraft
- Civil unrest/riots
- Explosions
- Lightning or fire
- Windstorms and hailstorms
- Smoke
- Theft
- Vandalism/malicious mischief
- Vehicles
- Volcanic eruptions
You will not be covered for losses not listed on this list. However, you can speak to your provider about details.
What is HO-8 insurance not covering?
The HO-8 policy is lacking in certain areas. An HO-8 policy covers only 10 perils, compared with the 16 that an HO-3 covers. Be aware of other coverage gaps such as the ones listed below.
Earthquakes
Although standard home insurance doesn’t cover earthquakes or seismic activity, it is important to mention this, especially if your area is at high risk of earthquakes. To protect your home and contents from damage or loss due to an earthquake, you will need optional earthquake insurance.
Falling objects
A standard HO-3 policy would cover damage to your roof, carport, and vehicle from falling objects if a tree branch falls on your home. An HO-8 policy does not cover falling objects.
Water damage
Water damage coverage is not usually included in a standard home insurance policy. Flood insurance is an optional add-on offered by many insurers, but an HO-8 contains additional exclusions that you need to be aware of. Flood damage from sudden events like burst pipes are not covered by an HO-8, but it is with an HO-3.
Who usually chooses an HO-8 insurance policy?
These are the most likely beneficiaries of this type of policy based on the coverage limits of an HO-8.
An older person who lives in an older house
An HO-8 is an option for homeowners who are unable to purchase standard home insurance because their house is older. Older homes could have unsafe plumbing or electrical systems that pose a danger. An HO-8 is your only option if the house’s most critical systems have not been updated and brought up-to-code.
Historic home owner
A homeowner who owns an historic house or has significant architectural significance may also be eligible to purchase HO-8 coverage. These types of homes can be expensive to replace and rebuild. The home’s replacement cost may be higher than its current market value. The HO-8 policy allows policyholders to set higher replacement costs than property values.
Homeowners who want a home with top-end finishes and features
Some HO-8 policyholders do not own an older house. An HO-8 policy is best for homeowners who have a house built with expensive or rare materials and finishes.
Questions frequently asked
What’s the difference between an H-3 and an H-8?
Both policies offer coverage for your home. The most popular type of homeowners insurance is an HO-3. It covers you against 16 perils. The HO-8 is for homeowners with older homes. This policy is not as comprehensive as other home insurance. It may be the best type of home insurance that you can get.
What are the payment methods for HO-8 claims?
Unless you have paid more for replacement cost coverage, HO-8 claims will be paid at actual cash value. Actual cash value is when insurance companies subtract depreciation from the amount they will reimburse you.
What type of home-insurance do I need to insure my historical home?
If your home is historical and listed in the National Register of Historic Places, an HO-8 policy may be the best type of coverage. HO-8 policies allow for greater replacement costs than the market value.
