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 10 HO 24 01 to HO 24 70
Part 11 HO 24 71 to HO 34 03
Numerical list of Endorsements:
This endorsement provides both business property and liability coverage for a variety of home businesses. The business must be owned by the named insured, or by a partnership, joint venture, or organization comprised solely of the named insured and resident relatives. Coverage is provided for business property, property of others in the insured's care because of the business, and business property leased by the insured so long as there is a contractual responsibility to insure it. There is coverage for accounts receivable, loss of business income, and valuable papers and records. The special limits of liability coverage for property away from the residence and used in business has been changed to not apply to antennas, tapes, wires, records, disks or other media that are used with electronic equipment that transmits or receives audio, visual, or data signals in or upon a motor vehicle.
Time element coverages include business income, extended business income, extra expense, and loss of business income because of the action of civil authority (subject to a seventy-two-hour time deductible).
The four principal classifications of business are Office, Service, Sales, and Crafts. To be eligible for this endorsement, the gross annual receipts of the business may not exceed $250,000.
Liability coverage is on an annual aggregate basis, and includes coverage for premises operations, products-completed operations, advertising injury, and personal injury. Coverage for the products-completed operations hazard is limited to the amount shown for coverage E; all other business liability is limited to twice the combined limits of coverages E and F.
The exclusion of liability arising out of or in connection with a "business" (2.a.) has been changed so that the exclusion does not apply to "your product" or "your work"—both defined terms. There is, however, no coverage for professional services, many of which are listed in the endorsement.
This endorsement can be used with all forms except HO 00 14.
An in-depth discussion of this endorsement can be found at ISO Home Business Insurance Coverage—Property.
This endorsement includes as an insured, any person or organization named in the schedule, with respect to their liability arising out of the ownership, maintenance, or use of the part of the premises leased to the named insured. The person or organization and the leased premises must be designated in the schedule.
An exclusion is added stating that coverage does not apply to any occurrence that takes place before or after an insured occupies the designated premises, or to when the insured’s business property is no longer at the scheduled premises. Also excluded are any structural alterations, new construction, or demolition operations performed by or for the designated person or organization named in the schedule. A final exclusion is added for any act or omission or failure to act by additional insured, even if that act or failure to act is directly related to the ownership, maintenance, or use of the designated premises.
This endorsement can be used with all forms except HO 00 14 and can only be used when HO 07 01 Home Business Insurance Coverage endorsement is attached to the policy.
This endorsement includes as an insured a vendor named in the schedule who distributes or sells the insured products. Coverage applies only to bodily injury or property damage arising out of the insured’s products. The insured’s products that are being sold or distributed must also be scheduled.
There is an exclusion for the vendor’s assumption of liability in a contract or agreement. However, this exclusion would not apply to liability for damages that the vendor would have had in the absence of a contract or agreement.
Other exclusions include the vendor providing a warranty unauthorized by the named insured, physical or chemical change in the product made intentionally by the vendor, unauthorized repackaging by the vendor, and failure to make inspections, adjustments, or tests that the vendor has agreed to.
This endorsement can be used with all forms except HO 00 14 and can only be used when HO 07 01 Home Business Insurance Coverage endorsement is attached to the policy.
This endorsement explains how payment will be made after a covered loss when there are loss payees other than the insured. The schedule provides for the name and address of the loss payee, description of the property, and whether condition A, B, or C applies.
When condition A Loss Payable applies for covered business property where the insured and a loss payee both have an insurable interest, the insurer will adjust all losses with the insured and pay the claim jointly to the insured and the loss payee, as interests appear. This provision might apply when the insured finances some business equipment, such as a copier.
When condition B Lender’s Loss Payable applies, losses are settled in order of precedence, as interests appear. The loss payee’s interest must be established by a written contract, such as a warehouse receipt or bill of lading. This loss provision is applicable when the insured has entered into a contract for the sale of covered property.
The loss payee may still receive payment even if the insured’s claim is denied because of failure to comply with the terms of the policy. The loss payee has the right to receive payment even if the loss payee has started foreclosure on the covered property. The loss payee also receives notice of cancellation or nonrenewal of the policy.
When condition C Contract of Sale is designated, losses are adjusted with the insured and payment is made jointly to the insured and loss payee, as interests appear. The difference between condition B and C is that for condition B to apply, the contract for the sale of covered business property must be written and documented by warehouse receipts, bills of lading, financing statements, or a contract or deed. Condition C has no such requirement.
There is no additional premium charge for this endorsement.
This endorsement can be used with all forms except HO 00 14 and can only be used when HO 07 01 Home Business Insurance Coverage endorsement is attached to the policy.
This endorsement simply excludes all personal and advertising injury coverage that is available from HO 07 01 Home Insurance Business Coverage. It may be used when, for example, the underwriter perceives an unacceptable exposure for personal and advertising injury due to the nature of the business.
This endorsement can be used with all forms except HO 00 14 and can only be used when HO 07 01 Home Business Insurance Coverage endorsement is attached to the policy.
This endorsement excludes coverage for bodily injury or property damage arising out of the selling, serving, or furnishing of alcoholic beverages. There is an exception for activities or functions that are described in the schedule. The exception applies at any time during the policy period unless otherwise specified in the schedule.
This endorsement can be used with all forms except HO 00 14 and can only be used when HO 07 01 Home Business Insurance Coverage endorsement is attached to the policy.
This endorsement provides coverage for perishable stock that is named in the schedule, along with a limit of liability. Perishable stock is defined as property on the business location that is kept under controlled temperature or humidity conditions for preservation and is susceptible to loss if these conditions change.
Perishable stock is covered for direct physical loss caused by the perils of breakdown, contamination, or power outage. Breakdown or contamination is defined as contamination by a refrigerant and a change in temperature or humidity that results from mechanical breakdown at the business location. Power outage means a change in temperature or humidity that results from loss of power, due to conditions beyond an insured’s control, on or off the business location.
The exclusions found in the homeowners form do not apply to spoilage of perishable stock except for earth movement, war, nuclear hazard, governmental action, and water.
These exclusions are added and apply only to perishable stock: disconnection from refrigerating, cooling, or humidity control system; deactivation of electrical power caused by manipulation of any switch or other power control device; inability of electrical utility company or other power source to provide power due to lack of fuel or governmental order; inability of power source at described premises to provide sufficient power due to lack of generating capacity to meet demand; and breaking of any glass that is a permanent part of any refrigerating, cooling, or humidity control unit.
The loss payment for covered losses of perishable stock that has been sold but not delivered is based on the selling price less discounts and expenses, or the actual cash value.
This endorsement can be used with all forms except HO 00 14 and can only be used when HO 07 01 Home Business Insurance Coverage endorsement is attached to the policy.
HO 07 01 Home Business Insurance Coverage endorsement provides a limit of $2,500 for valuable papers and records. Endorsement HO 07 56 can be used to increase that limit. The schedule provides for an increase in the limit and shows the total limit.
This endorsement can be used with all forms except HO 00 14 and can only be used when HO 07 01 Home Business Insurance Coverage endorsement is attached to the policy.
This endorsement provides special coverage for valuable papers and records, though still only up to the basic limit of $2,500 found in HO 07 01. The items are insured against direct physical loss caused by any peril unless specifically excluded. Coverage does not apply to property held as samples or for delivery after sale, or property in storage away from the residence premises.
The homeowners Section I exclusions do not apply except for war, nuclear hazard, and governmental action. The home business insurance form exclusion for accounts receivable and valuable papers and records is amended, and an exclusion for unauthorized instructions to transfer property to any person or any place is added.
This endorsement can be used with all forms except HO 00 14 and can only be used when HO 07 01 Home Business Insurance Coverage endorsement is attached to the policy.
This endorsement excludes coverage for any direct or indirect loss arising out of computer failure to process, recognize, or accept one or more dates or times. This includes software that cannot accept the year 2000 and beyond.
Also excluded is loss caused by the act or omission of anyone who consults, designs, repairs, restores, inspects, maintains, or oversees others to determine, rectify, or test, potential or actual computer failure or deficiency. If such a loss results in a peril insured against, then only the loss caused by such peril is covered.
The insurer will not pay to repair or restore any product or correct any services due to a failure of computer software from processing one or more dates or times.
This endorsement can be used with all forms except HO 00 14 and can only be used when HO 07 01 Home Business Insurance Coverage endorsement is attached to the policy.
This endorsement gives back some of the coverage that is excluded by HO 07 58, seen above. Coverage is provided for loss of income the business sustains and necessary extra expenses due to computer failure. Remember, computer failure is defined to mean failure of a computer to recognize or process one or more dates or times. It does not include any type of computer failure. Coverage is limited to $25,000 in any one policy year.
Liability coverage is provided for bodily injury, property damage, and personal and advertising injury due to computer failure. That coverage is subject to the applicable limit shown in the schedule of the Home Business Insurance Coverage endorsement.
This endorsement can be used with all forms except HO 00 14 and can only be used when HO 07 01 Home Business Insurance Coverage and HO 07 58 Computer-Related Damage Or Injury Exclusion are attached to the policy.