South Carolina Personal Lines Practice Exam

Which type of homeowners insurance form is used for a historic home valued above its market value?

1. HO-2

2. HO-5

3. HO-6

4. HO-8

The correct answer is: HO-8

The HO-8 homeowners insurance form is specifically designed to cover older homes, particularly those deemed historic or with unique architectural features that might have a value above the typical market rate. Unlike other homeowner's insurance forms that base coverages on the current market value of the home, the HO-8 form acknowledges that the cost to replace or repair an older or historic home might be significantly higher due to its specialized construction, materials, and historical significance. This form provides coverage for the dwelling at a replacement cost basis rather than market value, which is crucial for homes that cannot be reconstructed with modern materials in a similar fashion due to their age or historical status. Additionally, the policy typically includes coverage for certain perils and may have limitations on certain types of losses, which is suitable for older homes that may have different vulnerabilities compared to newer constructions. In contrast, other forms, such as HO-2, HO-5, and HO-6, focus on different types of coverage and may not adequately address the specific needs of historic homes, making HO-8 the appropriate choice for insuring properties of this nature.