What Is an HO-8 Insurance Policy? Modified Coverage Explained
An HO-8 policy is a form of homeowners insurance for older and historic buildings. If your home's rebuild value exceeds its current market value, then standard homeowners insurance can be too costly or difficult to qualify. This is where HO-8 insurance comes in, providing coverage specifically for these older and riskier types of domiciles.
Unfortunately, HO-8 insurance doesn't extend the same level of coverage as standard homeowners insurance. Understanding where you're protected and vulnerable is essential when choosing an insurance policy for your older home.
What Is HO-8 Insurance Coverage?
Also called modified coverage form 8, an HO-8 policy is a type of home insurance for historic buildings and owner-occupied older homes that were constructed decades ago. HO-8 insurance provides several types of coverage, including dwelling, personal liability, additional living expenses and more. However, coverage is quite limited compared to standard homeowners insurance, as you are protected against only 10 out of 16 named perils.
Since older homes are more likely to use hard-to-find building materials and complicated building techniques (e.g., hand-carved crown moldings), insurance carriers will typically pay for repairs and damages at functional replacement cost. For example, damaged hardwood floors would likely be replaced with still functional but cheaper plywood.
HO-8 insurance is one among eight types of insurance policies. Check below if an HO-8 or another policy is right for you.
Named-peril policy with most limited coverage (protects against 10 out of 16 perils, no liability, no personal property).
Named-peril policy with slightly more coverage than an HO-1 policy (16 named perils plus personal property and personal liability coverage).
Standard homeowners insurance with an open-peril policy that offers more coverage than an HO-2 policy.
Insurance policy for renters.
Highest level of homeowners insurance with most coverage. Includes open-peril policy and replacement cost coverage for personal property.
Insurance policy for condo owners.
Insurance policy for mobile homeowners.
Insurance policy for older properties. Doesn't cover as many perils as standard home insurance policy (HO-3). Typically, 10 perils are covered.
What Does an HO-8 Policy Cover?
The scope of coverage for an HO-8 policy is limited compared to standard homeowners insurance. Since you're protected against only select perils, you're vulnerable to multiple other types of risks.
HO-8 insurance coverage operates on a named-peril basis — you're covered for ONLY the specific perils named in your policy. You can find more details about your coverage on the declaration page.
Out of the 16 most common perils, you are protected against only 10. While you have coverage for several external perils, you're at risk for falling objects and damages related to your home systems and appliances, such as freezing, accidental tears and power surges.
Perils NOT Covered
Fire or lightning
Falling objects (e.g., tree branch)
Weight of ice, sleet, snow
Sudden/accidental discharge or overflow of water/steam from appliances, heating or air conditioning systems
Riot or civil commotion
Sudden/accidental tears, bulges, cracks and burns of HVAC or hot water systems or water heating appliances
Damage by aircraft
Freezing of plumbing, heating, air conditioning and fire sprinkler systems
Damage by vehicles
Sudden/accidental damage from power surges
Vandalism or malicious mischief
Dwelling and other structures
With dwelling coverage, the structure of your home is protected against the ten named perils listed in your policy. Unlike standard homeowners insurance coverage, your insurance provider may pay for repairs and replacements at functional replacement cost. Replacement costs for less modern building materials and designs, such stained glass and hand-carved moldings, can be costly. Repairs at functional replacement cost typically involve using cheaper or common construction materials and methods.
Your personal liability coverage will pay for legal costs if you're financially responsible for the property damages or injuries of somebody else who is on your property.
HO-8 insurance will cover your personal belongings for damages or loss due to one of the named perils listed in your policy. Typically, your insurer will replace them at actual cash value (the value of the item, minus depreciation).
Additional living expenses
Also called loss of use coverage, HO-8 insurance will pay for your daily living costs if you need to stay elsewhere because your home is uninhabitable. For example, you may receive compensation to stay in a hotel if your home is being repaired after a fire.
What Does an HO-8 policy Not Cover?
As mentioned, HO-8 policies don't have coverage for all 16 common perils. To recap, insurance companies don't provide coverage for freezing of falling objects; weight of ice, sleet and snow; discharge or overflow from appliances and home systems; tearing and bulging of home systems; freezing household systems; and damages from power surges.
Like many standard home insurance policies, the following events would not be considered a covered loss on HO-8 policies either:
Infestation of animals and pests
Wear and tear
With so many holes in your coverage, you may want to further protect your home and belongings. While older homes are riskier, some insurance providers may sell you a separate policy to cover earthquakes, flood damage or another type of risk. You can also see if your issuing insurance carrier would allow you to add coverage via an insurance rider (this will raise your premium).
Who Typically Chooses an HO-8 Policy?
HO-8 policies are typically reserved for owners of homes with replacement costs notably higher than its current market value. Generally, this means older and historic homes that were built with outdated materials or intricate designs that often carry costly material and restoration costs.
If you're the owner of an older home with high replacement costs, you may not qualify for standard homeowners insurance (HO-3). Instead, you'll need an HO-8 policy that provides coverage specific to your older home.
HO-8 Policy vs HO-3 Policy
ACV or RCV
Older or historic homes that can make it difficult to qualify for standard homeowners insurance.
Standard homeowners insurance that provides most common coverage needs.
How Much HO-8 Insurance Do I Need?
Your coverage limits will depend on the replacement costs of your home. Generally, your insurance carrier will consider your home's features, including construction methods, materials and building codes. Many HO-8 policyholders may only qualify for modified replacement coverage — your insurer will pay to repair or replace covered losses with modern and less costly building materials and construction methods.
As mentioned, HO-8 insurance doesn't cover against multiple perils. Depending on your area and the composition of your home, you may want to supplement your coverage with a separate policy that addresses a specific peril, such as earthquakes, floods or molds.
Insuring Your Older Home with an HO-8 Policy
Older homes have unique features and history but often need more TLC. However, the high-risk nature of your home can result in lower coverage and higher premiums. Finding the best homeowners insurance policy that meets your coverage needs and budget is essential. SmartFinancial can help. With our tools, you can compare rates and coverage from 200+ insurance carriers at the click of the button. Just enter your zip code below to grab your free quotes.