1. Forms
2. HO
3. HO-00-02

Form HO 00 02 - Homeowners 2 - Broad Form

The Homeowners 2 - Broad Form (HO 00 02) is a named perils insurance policy for dwellings, other structures, and personal property. This means that the policy only covers losses specifically listed in the policy. It also includes personal liability coverage and coverage for additional living expenses if the home becomes uninhabitable due to a covered loss. The HO 00 02 is designed for owner-occupants of dwellings. It offers more coverage than the basic HO-1 form but less than the more common HO-3 "Special Form".

Classes of Business

The HO 00 02 is primarily for owner-occupants of one- to four-family dwellings. This includes:

• Single-family homes
• Townhouses
• Dwellings purchased under a long-term installment contract where the buyer doesn't yet have legal title
• Dwellings under a life estate arrangement
• Dwellings under construction, provided the named insured will be the owner-occupant

It is generally not used for mobile homes (unless endorsed) or dwellings on farm premises. Rules also prohibit issuing it to owners who do not occupy the dwelling. For example, a family living in their own single-family house could use this form. Another example would be an individual who is building a new home they intend to live in once completed.

Special Considerations

There are several important points to consider with the HO 00 02:

• Named Perils: This is a significant limitation. If a peril is not specifically listed, it's not covered. The typically covered perils include fire, lightning, windstorm, hail, explosion, riot, aircraft, vehicles, smoke, vandalism, theft, falling objects, weight of ice/snow/sleet, and certain water/steam discharges. Common exclusions include flood, earthquake, power failure, neglect, and intentional loss.
• Eligibility: The dwelling must be owner-occupied. Incidental business occupancies, like a home office or studio, may be permitted, as well as having no more than two roomers or boarders per family unit.
• Comparison to Other Forms: The HO 00 02 offers broader coverage than an HO-1 but less than an HO-3 or HO-5. The HO-3, for instance, provides "open perils" (or special form) coverage on the dwelling and other structures, meaning it covers all perils unless specifically excluded, while still providing named perils coverage for personal property like the HO 00 02.
• Loss Settlement: To receive full replacement cost for a partial loss to the dwelling, the Coverage A limit typically needs to be at least 80% of the dwelling's estimated replacement cost. Endorsements like the HO 04 56 (Special Loss Settlement) may allow for lower percentages in some cases, or the HO 04 81 can change the settlement to Actual Cash Value.
• Related Forms: The HO DS 02 is a related declarations page for the HO 00 02 policy.

A real-world example of a special consideration: If a homeowner with an HO 00 02 experiences damage from a slow, continuous water leak that isn't a "sudden and accidental discharge," it might not be covered, whereas an open perils policy might cover it if not specifically excluded.

Key Information for Agents and Underwriters

• Pricing: The HO 00 02 is generally less expensive than an HO-3 or HO-5 due to its more limited named perils coverage. This can make it an option for homeowners seeking a balance between coverage and premium.
• Risk Assessment: Underwriters should carefully assess the specific risks associated with the property and the insured's needs. Since it's a named perils form, understanding the common perils in the geographic area is crucial. For example, in areas prone to specific types of storms not explicitly named, there could be coverage gaps.
• Coverage Gaps: Agents must clearly explain the named perils limitation to clients. Potential gaps exist for losses from unlisted perils. For instance, damage from certain types of earth movement (other than volcanic eruption) or various types of water damage (like sewer backup or ground seepage) are typically not covered. Agents should discuss endorsements that might fill some of these gaps if available and appropriate.
• Underwriting Guidelines:
  • Confirm owner-occupancy and the number of families (1-4 units).
  • Verify the property is not a farm or an ineligible mobile home.
  • Assess any incidental business use to ensure it meets eligibility rules (e.g., no more than two roomers/boarders, permissible office/studio use).
  • For older homes, while an HO 00 08 is often used, an HO 00 02 might be considered, but replacement cost provisions and the home's unique features should be carefully evaluated. Some FAIR plans may offer HO 00 02 for properties uninsurable in the voluntary market, potentially with endorsements like the HO 04 56 to address insurance-to-value requirements.
  • Be aware of special limits of liability for certain personal property, such as money, securities, jewelry, firearms, and business property. These limits can be increased via endorsement.
• Endorsements: Numerous endorsements are available to tailor coverage, such as increasing special limits for personal property (e.g., HO 04 61), adding coverage for other structures away from the residence premises (e.g., HO 04 92), or modifying loss settlement terms. The HO DS 02, the declarations page, will list the specific forms and endorsements that apply to the policy.