1. Forms
2. HO
3. HO-05-16

What the form is

The HO 05 16 01 02, titled "Exclusion of Terrorism (With Limited Exception) And Exclusion Of War," is an endorsement designed to be attached to a Homeowners insurance policy. Its primary function is to remove coverage for losses and damages resulting from acts of war. Crucially, it also excludes losses from acts of terrorism, as defined within the policy, though the title indicates there might be a provision for a 'limited exception' to this terrorism exclusion. This form helps insurers manage catastrophic risk exposures associated with such events.

Classes of business it applies to

This endorsement applies to personal lines Homeowners insurance policies. It would be used in conjunction with standard homeowners forms such as HO 00 02, HO 00 03, HO 00 05, etc.

Real-world example: If a home insured under a policy with this endorsement sustains damage during an event officially declared an act of war, or an act of terrorism as defined and excluded by the endorsement, the policy would generally not cover the repair costs for that damage, subject to the specifics of any 'limited exception' for terrorism.

Special considerations

• Post-9/11 Development: Forms like this became prevalent after the September 11, 2001 terrorist attacks, as the insurance industry sought to quantify and limit exposure to large-scale terrorism events. The Terrorism Risk Insurance Act (TRIA) and its subsequent reauthorizations in the U.S. also play a role in how terrorism coverage is handled.
• Limited Exception for Terrorism: The phrase "With Limited Exception" in the title is significant. The exact nature and scope of this exception would be detailed in the form's language and would be critical in determining if any coverage for terrorism-related losses remains.
• State-Specific Availability: The specific version HO 05 16 01 02 was noted as available in Arizona from February 18, 2002, for use by interested insurers. The use and exact wording of such endorsements can vary by state and by insurer, often requiring approval from state insurance departments.
• Definition of Terrorism: The endorsement will typically include a specific definition of what constitutes an "act of terrorism," which is key to applying the exclusion.

Key information for agents and underwriters

• Agents: It is crucial for agents to thoroughly explain this exclusion to policyholders. Clients need to understand the extent to which their policy does not cover war or terrorism, and particularly the details of any 'limited exception' for terrorism. This manages expectations and ensures transparency.
• Underwriters: Underwriters must be aware of this endorsement when evaluating a policy's overall risk. While it carves out significant perils, the specifics of the 'limited exception' are important. They should also be cognizant of any state-mandated requirements or insurer-specific guidelines concerning terrorism exclusions and TRIA compliance. The precise definition of "terrorism" in the form is a key reference point for coverage interpretation and potential claims.