Summary: The coverages of the standard homeowners forms (Forms HO 00 02, 03, 04, 05, 06, 08, and 14) are designed to provide the kinds of insurance protection that most homeowners will need. However the needs of individual insureds can diverge, so endorsements are used to tailor coverage to meet these needs. Additionally, insurers may use endorsements to limit coverage, like when the windstorm or hail exclusion endorsement is attached to coastal homeowners policies.
The endorsements discussed here are those under the jurisdiction of Insurance Services Office (ISO). They do not constitute the extent of tailoring possible with respect to homeowners forms. The introduction in the ISO homeowners manual to the program's general rules state that "in all cases not specifically provided for in this manual," the rules, rates, forms, and endorsements of individual insurers govern each coverage. This makes it possible for insurers to develop special endorsements as the need arises, assuming, of course, that the proposed risk is considered insurable and that an appropriate premium can be obtained.
The homeowners program was revised in 2022, with previous versions of 2011 and 2000. Comments relating to individual endorsements below are based on form designations and language of the 2022 ISO homeowners program unless otherwise indicated. The edition date of the 2022 endorsements are generally 03 22; the 2011 endorsements are generally 05 11. Differences from the 2011 program in language or coverage provisions are noted. This discussion is on multistate forms; endorsements limited to one or two states have not been included.
The endorsements are discussed in numerical order. Because there are so many endorsements, we have split the discussion into multiple sections:
Part 1 HO 03 12 to HO 04 26
Part 2 HO 04 30 to HO 04 49
Part 3 HO 04 50 to HO 04 66
Part 4 HO 04 77 to HO 04 99
Part 5 MH 04 01 to MH 04 47 Mobilehome Coverage
Part 6 HO 05 24 to HO 05 86
Part 7 HO 06 01 to HO 06 49
Part 8 HO 06 51 to HO 06 95
Part 9 HO 07 01 to HO 07 59 Home Business Insurance Coverage
Part 10 HO 24 01 to HO 24 70
Part 11 HO 24 71 to HO 34 03
Numerical list of Endorsements:
HO 03 12 03 22 Windstorm Or Hail Percentage Deductible
HO 03 18 03 22 Hurricane Deductible
HO 04 10 03 22 Additional Interests – Residence Premises
HO 04 11 03 22 Additional Limits Of Liability For Coverages A, B, C And D
HO 04 12 03 22 Increased Limits On Business Property
HO 04 13 03 22 Computer-Related Damage Or Injury Exclusion
HO 04 15 03 22 Limited Computer-Related Damage Or Injury Liability Coverage
HO 04 16 03 22 Premises Alarm, Water Leak Detection Or Fire Protection System
HO 04 18 03 22 Deferred Premium Payment
HO 04 20 03 22 Specified Additional Amount Of Insurance For Coverage A – Dwelling
This endorsement adds a special deductible to the policy for loss caused by windstorm or hail. The amount of the deductible is determined by multiplying the Coverage A limit in the Declarations by the deductible percentage shown in the Schedule of this endorsement. Available deductible percentages are 1, 2, 5, 7.5, and 10%. No other deductible in the policy would apply to loss caused by windstorm or hail; the insured is not charged twice.
This endorsement can be used with all forms except HO 00 04, HO 00 06, and HO 00 14.
This endorsement adds a special deductible to the policy for loss caused by a hurricane. For the purposes of this endorsement, a hurricane is not the same as a windstorm. The hurricane deductible applies to loss caused by windstorm or hail while a hurricane watch or warning is issued for the state by the National Hurricane Center of the National Weather Service. The deductible applies only until 24 hours following the termination of the last hurricane water or warning for any part of the state by the National Hurricane Center or the National Weather Service. The deductible is either the dollar amount shown in the Schedule or if a percentage is shown, the percentage multiplied by the Coverage A limit in the Declarations.
A definition of "state" is added to the policy, meaning the state in the United States where the "residence premises" is located, or Washington DC, Puerto Rico, Guam, or the U.S. Virgin Islands, if the "residence premises" is located in one of those.
This endorsement is used if, in addition to the Mortgagee, a person or organization has an insurable interest in the residence premises. If the policy is canceled or nonrenewed, the named party will be notified in writing. Often the additional insured and additional interests endorsements are confused; the first provides limited property and liability coverage, but the second does not.
In the event of a covered loss that exceeds the limit of liability shown on the declarations, the Coverage A limit of liability of the policy will be amended to equal the current replacement cost of the building. Coverages B, C, and D will be increased by the same percentage applied to coverage A, retroactive to the date of the loss. The insured must report any additions or alterations that increase the building's replacement cost by five percent or more, within 30 days of completion.
If the dwelling is rebuilt at a new premises, the replacement cost is limited to what it would have cost to rebuild the dwelling on the original premises. The premium is determined by multiplying the base premium by a factor of 1.15.
The special limits applicable to business property on the residence premises used primarily for business purposes insured under the homeowners form ($3,000 on-premises, $1,500 off-premises) may be increased by means of this endorsement. Increases in these special limits do not increase the coverage C limit.
The $3,000 on-premises limit may be increased, in increments of $1,000, up to $10,000. The off-premises limit automatically increases to an amount that is fifty percent of the total on-premises limit. So if a limit of $5,000 is shown in the schedule for the on-premises limit, the limit for off-premises is $2,500.
The endorsement does not afford coverage for several categories of property: business property in storage or held as a sample; business property for sale or delivery after sale; or to business property pertaining to a business actually conducted on the residence premises. The exposure of business property that is part of a business actually conducted on the residence premises may be covered by endorsement HO 04 42, permitted incidental occupancies, or in HO 07 01 home business insurance coverage.
Insurers have historically attached this endorsement to policies to limit the perceived exposure to Y2K problems, such as software not accepting the year 2000. The 2022 revision replaces the year 2000 to say "one or more dates or times". The endorsement applies to the "business" described in: limited home day care coverage, permitted incidental occupancies, farmers personal liability coverage, or designated business pursuits liability coverage, if any are attached to the policy.
If home day care or a permitted incidental occupancy is shown, then a section I property loss caused directly or indirectly by computer hardware, software, etc, because they cannot process, interpret, or accept one or more dates or times is excluded. However, if loss results in a peril insured against, that loss is covered.
Bodily injury or property damage arising from Y2K computer-related failure is excluded for limited home day care coverage, permitted incidental occupancies, farmers personal liability coverage, and designated business pursuits liability coverage, with certain exceptions.
Depending upon the intent of the insurer, both the HO 04 13 and the HO 04 15 could be attached to a policy. In that event, loss to property covered under the limited home day care coverage or permitted incidental occupancies is excluded, but there is bodily injury or property damage coverage.
This endorsement can be used with all forms except HO 00 08 and HO 00 14.
This endorsement can be attached to policies when the homeowners insured has one of the following indicated on the declarations—limited home day care coverage, permitted incidental occupancies, farmers personal liability coverage, or designated business pursuits liability coverage.
The provisions of the endorsement apply only to the described business, and state that there is limited coverage for bodily injury or property damage arising out of a computer failure. "Computer failure" is defined as the failure or deficiency of a "computer", including hardware, software, operating systems, networks, or chips, because it cannot recognize, discern, interpret, accept, or process one or more dates or times.
Coverage is subject to the Coverage E and F limits shown in the Declarations of the policy or, if applicable, the Schedule of H0 04 97 limited home day care coverage endorsement. The Section II exclusions in endorsement HO 04 13 do not apply to the coverage provided in this endorsement.
This endorsement can be used with all forms except HO 00 08 and HO 00 14.
The insured can receive a premium credit for installing an insurer-approved alarm system, water leak detection system, and/or automatic sprinkler system. The endorsement is written acknowledgment by the insurer that such a system is in place on the "residence premises". It also creates an obligation on the insured's part to maintain the system in working order, and to let the insurer know promptly if any changes are made to the system or it is removed.
The reduced premium is calculated by multiplying the base premium with the applicable factor. The ISO manual has a table listing the different types of installed systems and their factors, ranging from 0.87 to 1.00. When a policy is eligible for two or more credits, only the highest one will be applied.
When a homeowners policy is written for a term of three years, the premium may be paid in annual installments by attaching this endorsement and indicating the choice of installment payments in the policy declarations. The amount of each annual installment is the annual premium in effect for the company at the time the payment is due.
When the insured purchases this coverage, either 25 percent or 50 percent of the declared coverage A limit is available to apply to a coverage A loss which exceeds the limit of liability shown in the declarations. Unlike the HO 04 11, the policy is not endorsed retroactively, and coverages B, C, and D are not affected. The insured agrees to insure the dwelling for full replacement cost, and notify the insurance company of any additions or alterations increasing the dwelling's replacement cost by 5 percent or more.
If the dwelling is rebuilt at a new premises, replacement cost is limited to what it would have cost to rebuild the dwelling on the original premises.
The premium is calculated by multiplying the base premium by the applicable factor. The additional 25% option has a factor of 1.03 and the additional 50% option has a factor of 1.06.
This endorsement can be used with forms HO 00 02, HO 00 03, and HO 00 05.
These endorsements were introduced in 2002 as a response to insurers wishing to limit their exposure to wet or rot, bacteria, and mold. They are virtually identical, but vary slightly as they apply to different homeowners forms. The endorsements add a definition of fungi: "any type or form of fungus, including mold or mildew, and any mycotoxins, spores, scents or by-products produced or released by fungi."
They then go on to amend the additional coverages by adding a new coverage for loss caused by fungi, which is limited to the amount indicated in the schedule for section I. Included in this amount is the cost to remove the fungi, bacteria, or wet or dry rot, the cost to tear out and replace any part of the building as needed to gain access to the fungi or wet rot, and the cost to test the air to confirm that fungi are present or absent. Coverage under this endorsement only applies when the fungi or wet rot results from a covered cause of loss and if reasonable means were used to save and preserve the property from further damage.
Section II liability for property damage or bodily injury resulting from an "occurrence" involving fungi, bacteria, or wet or dry rot is also scheduled on the endorsement. The most the insurer will pay under Coverage E is the sublimit shown in the schedule for Section II – Coverage E aggregate sublimit of liability for fungi, wet or dry rot, or bacteria, regardless of the number of locations insured, number of persons injured, number of insureds, or number of occurrences or claims made.
HO 04 26 can be used with forms HO 00 02, HO 00 04, HO 00 06, and HO 00 08. HO 04 27 can be used with forms HO 00 03 and HO 00 05. HO 04 28 can be used with form HO 00 14.