Alabama Property and Casualty Practice Exam

Based upon the number of perils covered, which Homeowner form is the most limited?

1. HO-2

2. HO-3

3. HO-5

4. HO-8

The correct answer is: HO-8

The HO-8 form, also known as the Modified Coverage form, provides very limited coverage compared to other homeowner forms. It is specifically designed for older homes that may not fit the standards of replacement cost coverage. The HO-8 form typically covers specific perils rather than offering the broad range of coverage found in other forms, such as HO-2, HO-3, and HO-5. This form mainly covers a set list of named perils, which makes it more restrictive. It generally includes losses caused by fire, theft, vandalism, and certain types of water damage, but it does not cover other perils unless they are specifically listed. This limitation is particularly relevant for insureds whose homes are valued lower than the cost of replacing them, as the coverage under HO-8 often ties to market value rather than replacement cost. In contrast, the other forms typically provide broader coverage, with the HO-5 or HO-3 being examples of all-risk policies, meaning they cover all perils unless specifically excluded. Therefore, when assessing the extent of peril coverage among homeowner forms, the HO-8 is distinctly the most limited.