1. Forms
2. HO
3. HO-04-91

What the form is

The HO 04 91, titled "Coverage B – Other Structures Away From The Residence Premises – Actual Cash Value Loss Settlement," is an endorsement to a homeowners policy. Its primary purpose is to extend the policy's Coverage B (Other Structures) to apply to structures that are owned by the insured and used in connection with the "residence premises" but are physically located elsewhere. Importantly, this endorsement does not increase the overall limit of liability for Coverage B; it simply allows a portion of that existing limit to apply to these off-premises structures. Loss to such structures is settled on an Actual Cash Value (ACV) basis, meaning depreciation will be factored in.

Classes of business it applies to

This endorsement is used with standard homeowners insurance policies, specifically forms like HO 00 02, HO 00 03, and HO 00 05. It is intended for personal insurance scenarios where a homeowner has a structure related to their home but not on the same lot. Real-world examples include:

• A detached garage or shed located on an adjacent property or down the street, but used by the insured for their personal storage or vehicle parking in connection with their insured home.
• A boathouse or dock owned by the insured at a nearby lake or waterway, used for their personal recreational activities tied to their primary residence.
• A gazebo or other recreational structure on a separate parcel of land that is considered part of the insured's use of their residence premises.

The endorsement typically excludes structures used as dwellings or for any business purpose (though some modifications to this exclusion may apply if a home-sharing endorsement is also part of the policy).

Special considerations

• Actual Cash Value (ACV) Settlement: Losses are settled at ACV, not replacement cost. This means the payout will be for the depreciated value of the damaged structure. For replacement cost coverage on such structures, endorsement HO 06 91 might be an alternative.
• No Increase in Coverage B Limit: The endorsement extends coverage but does not add to the total Coverage B limit stated in the policy. The value of the off-premises structure(s) effectively shares the existing Coverage B limit with any other structures located on the residence premises.
• Use in Connection with Residence Premises: The key is that the off-premises structure must be used in connection with the insured residence.
• Excluded Uses: Structures used as dwellings (e.g., a rental cabin) or for business operations are generally not covered by this endorsement. Land itself is also excluded.
• Alternative to Separate Policy: Before this type of endorsement, insuring such structures often required a more expensive, separate policy (like a fire policy).
• Home-Sharing Impact: If a home-sharing endorsement is part of the policy, there might be an exception to the exclusion for structures rented or held for rental to a home-sharing occupant.

Key information for agents and underwriters

• Risk Assessment: Underwriters should confirm the nature, use, and location of the off-premises structure. Ensure it's genuinely used in connection with the primary residence and not for ineligible purposes like a separate dwelling or business. The distance from the primary residence might also be a consideration.
• Coverage Adequacy: Agents should discuss with the insured whether the existing Coverage B limit is sufficient to cover both structures on the residence premises and the off-premises structure(s) on an ACV basis. If not, increasing the overall Coverage B limit or considering specific coverage (like with HO 04 92) might be necessary.
• ACV vs. Replacement Cost: Clearly explain the ACV loss settlement to the insured. If replacement cost is desired, explore alternatives like HO 06 91.
• Distinction from HO 04 92: While HO 04 91 provides blanket coverage for other structures away from the premises within the Coverage B limit, HO 04 92 allows for scheduling specific structures away from the residence premises with their own separate limits (also typically on an ACV basis unless modified).
• Documentation: It's good practice to document the description, location, and use of the off-premises structure in the policy file.