1. Forms
2. HO
3. HO-05-17

What the Form Is

The Homeowners Endorsement HO 05 17, specifically edition 01 02, is titled "Exclusion of War and Terrorism". Its primary function is to modify the standard homeowners insurance policy to explicitly exclude coverage for losses or damages that arise from acts of war or terrorism. This includes events such as declared or undeclared war, warlike acts by military forces, insurrection, rebellion, revolution, and acts of terrorism as defined within the endorsement. This endorsement became prevalent as a way for insurers to manage catastrophic loss exposures, particularly after events highlighted the potential scale of terrorism-related damages.

Classes of Business It Applies To

This endorsement is used in Personal Lines, specifically with Homeowners insurance policies. It applies to various homeowners forms, including those for owner-occupied homes (e.g., HO 00 03, HO 00 05). While designed for homeowners, similar exclusionary language for war and terrorism is common across most property insurance lines.

Real-world example: If a home is damaged as a direct result of a certified act of terrorism or a warlike action by a foreign enemy, this endorsement would typically preclude coverage for the damages under the homeowners policy.

Special Considerations

• Mandatory Filing: Insurers wishing to use this exclusion typically must file it with state insurance departments and provide justification for its need. Its use is widespread and often a standard part of homeowners policies to keep coverage affordable by excluding such high-risk, potentially catastrophic events.
• Definition of Terrorism: The endorsement usually contains a specific definition of "terrorism," which is crucial for determining whether the exclusion applies to a particular event. This definition may refer to the nature of the act, its intent (e.g., to influence government or intimidate the public), and sometimes certification by governmental bodies.
• Replaces Other Exclusions: It typically replaces any pre-existing, often broader or less specific, war exclusion language in the policy.
• No Buy-Back: Generally, there is no option within the homeowners policy to buy back coverage for the excluded perils of war and terrorism.

Real-world example: Following significant historical terrorism events, the insurance industry moved to implement more explicit terrorism exclusions like the HO 05 17 01 02 in policies where federal backstops like TRIA (Terrorism Risk Insurance Act) might not apply or apply differently than in commercial lines.

Key Information for Agents and Underwriters

• Universal Application: Agents should understand that this is a very common, if not universal, exclusion in standard homeowners policies. It's crucial to communicate this limitation to insureds.
• Risk Management: For underwriters, this endorsement is a critical tool for managing unquantifiable and potentially catastrophic exposures. Its absence would be highly unusual for a standard market homeowners policy.
• Pricing Impact: Homeowners insurance premiums are calculated based on the exclusion of such extreme events. Including coverage for war and terrorism would make policies prohibitively expensive or unavailable.
• Clarity is Key: The specific wording, especially the definition of "terrorism," is important. Underwriters should be familiar with the version approved in their jurisdiction.
• Regulatory Compliance: Insurers must ensure the filed and approved version of this endorsement is used in each state where they adopt it.