1. Forms
2. HO
3. HO-04-28

What the Form Is

The HO 04 28 is an endorsement to specific homeowners insurance policies that addresses coverage for losses related to fungi, wet or dry rot, or bacteria (often collectively referred to as mold). Its primary function is to provide a limited amount of coverage for damage caused by these conditions, which are often otherwise excluded or ambiguously covered under standard policy language. This endorsement typically adds a new exclusion for fungi, wet or dry rot, or bacteria to Section I (Property Coverages) and then grants back a specific, often aggregate, sublimit of coverage under the Additional Coverages section. It also introduces a sublimit that applies to liability coverage (Section II, Coverages E and F) for claims arising from these perils.

Classes of Business It Applies To

This endorsement is used in personal lines homeowners insurance. It is specifically designed to be attached to the following policy forms:

• HO 00 04 (Contents Broad Form): This policy is for tenants renting an apartment, house, or condominium.
• HO 00 06 (Unit-Owners Form): This policy is for owners of condominium or cooperative units.

Real-world example: A condominium owner with an HO 00 06 policy discovers significant mold growth behind a wall due to a slow, undetected leak from an adjoining unit. The HO 04 28 endorsement, if attached to their policy, would specify the maximum amount the insurer will pay for the mold remediation within their unit and for any covered personal property damage, as well as liability if, for instance, a guest becomes ill due to mold exposure in their unit, subject to the endorsement's sublimits.

Special Considerations

• Sublimits are Key: The most crucial aspect of this endorsement is that it provides coverage only up to specified dollar amounts (sublimits) for both property and liability losses. These sublimits are often an aggregate amount for the entire policy period, meaning once that limit is exhausted, no more coverage is available for these perils during that period.
• Mandatory or Optional: Depending on the insurer, state regulations, or specific insurance programs (like those in coastal or high-humidity areas), this endorsement or a similar one (like HO 04 26 or HO 04 27 for other homeowners forms) might be a mandatory attachment to manage the insurer's exposure to mold-related claims. In other cases, it may be an optional buy-back of coverage.
• Interaction with Other Endorsements: The HO 04 28 is often used in conjunction with other endorsements that modify the base HO 00 04 or HO 00 06 forms. For example, it's noted to be used with HO 00 04 when modified by HO 05 24 (Special Personal Property Coverage) and with HO 00 06 when modified by HO 17 31 (Unit-Owners Coverage C Special Coverage) or HO 17 32 (Unit-Owners Coverage A Special Coverage).
• Coverage Grant and Limitation: It's important to understand that while the endorsement provides some coverage, it also serves to clearly define and limit the insurer's responsibility for losses that can be widespread and costly.

Real-world example: An insurer operating in a state with a high incidence of mold claims might make the HO 04 28 (or its equivalent for other HO forms) a standard part of their homeowners policies to ensure that all parties understand the financial limits for such claims from the outset.

Key Information for Agents and Underwriters

• Agents: It is vital for agents to clearly explain the function of this endorsement to insureds, particularly the sublimits for property and liability. Clients should understand that this is not unlimited coverage for mold or rot. Agents should also clarify if the basic limits can be increased for an additional premium.
• Underwriters: Underwriters should consider the property's specific risk factors for fungi, wet/dry rot, or bacteria, such as the age of the dwelling, geographic location (humidity levels), history of water damage, and overall maintenance. While the endorsement caps the payout, a high-risk property might still present an undesirable exposure even with the sublimit. The premium for the basic limits provided by this endorsement may be minimal or included, but there will typically be an additional charge if the insured wishes to purchase higher available sublimits. This endorsement helps standardize the insurer's approach to a significant and often litigated peril, providing more certainty in risk assessment and claims handling.