1. Forms
2. HO
3. HO-04-51

What the form is

The HO 04 51, titled "Building Additions And Alterations – Increased Limit," is an endorsement to the Homeowners 4 Contents Broad Form (HO 00 04). The HO 00 04 policy automatically provides coverage for building additions, alterations, fixtures, improvements, and installations made by the tenant to the part of the residence premises they exclusively use. This coverage is typically limited to 10% of the Coverage C (Personal Property) limit. The HO 04 51 endorsement allows the insured tenant to increase this specific limit of liability to a higher amount, as specified in the endorsement schedule.

Classes of business it applies to

This endorsement is specifically designed for tenants who are insured under an HO 00 04 policy and who have made significant investments in improving their rented dwelling. Examples include:

• A tenant who renovates the kitchen or bathroom in their apartment.
• A renter who installs new flooring, custom cabinetry, or upgraded light fixtures.
• A tenant who has made other substantial alterations or additions to the rented property at their own expense.

In such cases, the standard 10% of Coverage C might be insufficient to cover the value of these improvements in the event of a loss.

Special considerations

• This endorsement is exclusively for use with the HO 00 04 (Contents Broad Form).
• The increased limit for Building Additions and Alterations will be shown on the endorsement schedule or declarations page.
• The premium for this endorsement is calculated based on the desired increase in coverage, often using a rating factor applied to the base premium of the HO 00 04 policy.
• It's important to distinguish these tenant improvements from property that is the landlord's responsibility to insure.

Key information for agents and underwriters

Agents: When writing an HO 00 04 policy, agents should inquire if the tenant has made any significant improvements or alterations to their rental unit. If so, the agent should discuss the adequacy of the standard 10% of Coverage C limit and recommend the HO 04 51 endorsement if the value of the improvements exceeds this amount. This helps prevent underinsurance for the tenant's investments.

Underwriters: Underwriters should verify that the requested increased limit is reasonable and reflects the actual value of the tenant's additions and alterations. Documentation, such as receipts or appraisals for the improvements, may be helpful in determining an appropriate limit. The exposure is for the tenant's interest in these improvements, not the entire building structure. The premium calculation typically involves applying a specific factor for each additional $1,000 of coverage to the HO 00 04 all-perils premium.