1. Forms
2. HO
3. HO-01-04

What the form is

The HO 01 04 is a Special Provisions endorsement specifically for California. Its primary purpose is to amend the standard Insurance Services Office (ISO) homeowners policy forms to align with California's unique legal and regulatory requirements. This endorsement ensures that the homeowners policy language is compliant with state-specific mandates and addresses particular conditions relevant to California insureds. It can modify various sections of the policy, including definitions, conditions, exclusions, and coverage provisions. For example, one edition of this form gives notice that throughout the policy, the term “spouse” includes an individual registered under California law as the named insured's domestic partner.

Classes of business it applies to

This endorsement applies to personal homeowners insurance policies written on ISO forms (such as HO 00 02, HO 00 03, HO 00 04, HO 00 05, HO 00 06, or HO 00 08) for residences located in California. It is used for owner-occupied dwellings, tenants, and condominium unit owners, depending on the base policy form to which it is attached.

Special considerations

The use of the HO 01 04 is crucial for ensuring homeowners policies issued in California are compliant with state law. Key considerations include:

• Mandatory Modifications: Insurers typically must include this or a similar state-specific endorsement to address California's requirements.
• Definition Changes: As mentioned, it can modify definitions, such as extending the definition of "spouse" to include registered domestic partners.
• Intentional Loss Exclusion: The Section I intentional loss exclusion may be amended so that it does not apply to an innocent insured's claim if arson is the cause of loss.
• Suit Against Us Condition: The time limit for an insured to bring a suit against the insurer might be modified. For example, one version allows the insured up to five years to bring suit.
• Actual Cash Value (ACV) Definition: Some editions of this form have been revised to provide a specific definition of actual cash value, which can be critical in loss settlement.
• Loss Settlement Provisions: The form may alter how losses are settled, for instance, in relation to a state of emergency under California law.
• Fungus Exclusion: Revisions have also addressed exclusions, such as adding fungus as an excluded cause of loss to clarify that neither mold nor fungus is covered under certain circumstances.

Real-world example: If a home co-owned by registered domestic partners is damaged, the HO 01 04 ensures that the domestic partner is recognized as a spouse for the purposes of the policy, clarifying their rights and interests under the policy. Similarly, if a home is intentionally burned by one insured without the knowledge or participation of another co-insured, the innocent co-insured may still be able to recover for their share of the loss due to modifications in this endorsement.

Key information for agents and underwriters

• Compliance: Agents must ensure that the correct and most current version of the HO 01 04 is attached to all California homeowners policies to maintain regulatory compliance.
• Policy Interpretation: Underwriters and claims adjusters need to be thoroughly familiar with the modifications made by this endorsement as it directly impacts coverage interpretation and claims handling in California.
• Risk Assessment: While the endorsement primarily addresses legal and regulatory compliance, some provisions (like those related to intentional acts or specific exclusions) can have implications for risk assessment and underwriting guidelines.
• Edition Dates: It's critical to use the proper edition date of the form, as provisions can change over time. For example, form HO 01 04 (12-05) replaced an earlier (09-02) version. Underwriters should be aware of which policy provisions were in effect at the time of policy inception or renewal.
• Coverage Nuances: Understanding how this endorsement interacts with the base policy is key to avoiding coverage gaps or misunderstandings. For instance, modifications to the "suit against us" condition directly affect the timeframe within which a policyholder can legally challenge a claim decision.