1. Forms
2. HO
3. HO-05-41

What the form is

The HO 05 41, titled "Extended Theft Coverage For Residence Premises Occasionally Rented To Others," is an endorsement to a standard homeowners insurance policy. Its primary function is to buy back coverage for theft of personal property when the insured occasionally rents out all or part of their residence to someone other than an "insured" under the policy. Standard homeowners policies often contain an exclusion that eliminates coverage for theft from a part of the "residence premises" rented to others. This endorsement modifies that exclusion, but only for rentals that are considered "occasional."

Classes of business it applies to

This endorsement is designed for homeowners who infrequently rent out their primary dwelling or a portion of it, such as a room or a floor. Examples include:

• A homeowner who rents out their entire home for a week or two while they are on vacation.
• An individual who rents a spare bedroom to a boarder on a short-term, occasional basis.

It is intended for incidental rental activity rather than for individuals operating a regular rental business out of their home, which would typically require a landlord policy or a more specific home-sharing endorsement. The rise of short-term rental platforms has increased the relevance of this type of coverage, though newer editions of the form may have specific language regarding "home-sharing occupants."

Special considerations

• "Occasionally Rented" Definition: The term "occasionally rented" is crucial but not explicitly defined in the form, which can lead to ambiguity. The frequency and duration of rentals will determine if this endorsement is appropriate. Insurers may have their own guidelines for what constitutes "occasional."
• Excluded Property: This endorsement typically does not provide coverage for certain types of high-value personal property. Commonly excluded items include money, bank notes, bullion, gold, silverware, pewterware, platinum, coins, securities, tickets, stamps, jewelry, watches, furs, and precious or semi-precious stones.
• Home-Sharing Activities: The 02 17 edition of this form introduced language that may exclude coverage if the property is rented to "home-sharing occupants." This is a significant consideration for those using platforms like Airbnb or VRBO, and the applicability may depend on the specific insurer's interpretation and the policy edition.
• Regular Rentals: If the rental activity is regular or constitutes a business, this endorsement is likely insufficient, and a commercial or landlord policy would be more appropriate.

Key information for agents and underwriters

• Clarify "Occasional": Agents should discuss with clients what their rental activity entails to ensure it aligns with the insurer's interpretation of "occasional." Misrepresenting the rental frequency could jeopardize coverage.
• Assess Rental Frequency: Underwriters must carefully evaluate the frequency and nature of the rental. Information such as the number of weeks rented versus owner-occupied may be required. If the rental activity is too frequent or business-like, this endorsement should not be offered.
• Advise on Excluded Property: Agents must inform clients about the types of personal property that remain excluded from theft coverage even with this endorsement.
• Home-Sharing Nuances: Be aware of the specific policy edition date and any language pertaining to "home-sharing occupants," as this can significantly impact coverage for clients using short-term rental platforms. This endorsement may not be a complete solution for all home-sharing risks.
• Intended Use: This endorsement is for owner-occupied dwellings. It is not designed for non-owner-occupied rental properties.