There are many types of home insurance policy forms to meet the needs of different types of homeowners. For example, the HO1, HO2, and HO3 policy forms are standardized home insurance policies that cover varying types of perils, or exposures, that can cause damage to the home. However, these policies are generally designed for modern, single-family dwellings. The HO8 policy form is commonly used to insure older homes that may not be properly insured by one of the other forms. Unfortunately, the HO8 form has less coverage than some of the other policies and is used more often as a default for older homes that would otherwise not be insurable. Before accepting the HO8 form, you need to understand what it covers and on what basis.
One of the primary differences between an HO8 and other home insurance policies is that it generally pays Actual Cash Value (ACV) instead of replacement cost. The replacement cost on older, historic homes can be quite a bit higher than on modern homes. Therefore, insurers are often unwilling to insure the full value of replacing older homes and will instead offer only ACV policies. If the financial value of your home is all that you are interested in recovering, an ACV HO8 policy may be fine for your needs. On the other hand, if you want your home completely restored to its original condition after a loss, the HO8 policy will likely be insufficient.
Another thing to keep in mind is the HO8 policy only insures damage caused by perils it specifies on the policy. This is known as a “named peril” policy, where only damage caused by specified perils is covered. It’s more advantageous to have a home insurance policy written on an “open perils” basis, where all perils, except the ones excluded, are covered. One of the key covered perils found in most other policies, water damage, is not a covered peril on the HO8 form. The implications of this exclusion can be significant for homeowners and needs to be evaluated if you are considering an HO8 policy.
It’s possible to find insurance companies that will insure your older home to the level that you desire. There are some insurers that specialize in this type of product and may be able to offer more coverage than the average HO8 form. A good resource is your local historic preservation organization. They may have experience in assisting other homeowners with similar homes that require specialized insurance.