1. Forms
2. HO
3. HO-06-91

What the form is

The HO 06 91, titled "Coverage B – Other Structures Away From The Residence Premises – Replacement Cost Loss Settlement For Buildings," is an endorsement to an ISO (Insurance Services Office) homeowners policy. Its primary function is to change the basis of loss settlement for certain detached structures owned by the insured that are located on a premises other than the main "residence premises" shown in the policy declarations. Specifically, it upgrades the coverage for these qualifying 'building' structures (defined as having walls and a roof) from Actual Cash Value (ACV) to Replacement Cost (RC). This means that in the event of a covered loss, the insurer will pay the cost to replace the damaged structure with new materials of like kind and quality, without a deduction for depreciation, subject to policy limits and conditions.

Classes of business it applies to

This endorsement is used in personal lines homeowners insurance. It is designed for policyholders who own structures on a property separate from their primary home and want enhanced coverage for those structures. Common real-world examples include:

• An insured owns a vacation property with a detached garage or a small guesthouse, and these structures are covered under their primary home's policy for "Other Structures Away From The Residence Premises."
• An individual owns an additional lot with a workshop or storage shed that qualifies as a building.

In such scenarios, the HO 06 91 endorsement allows these separate building structures to be insured for their full replacement cost rather than their depreciated value.

Special considerations

• Building Structures Only: The replacement cost settlement under this endorsement specifically applies to structures that are 'buildings' (i.e., walled and roofed). Other structures at the separate premises, like fences, docks (unless meeting the building definition), or detached patios, might still be covered on an ACV basis or require a different endorsement for replacement cost coverage (e.g., HO 06 92 for specifically listed structures).
• Policy Limits: The standard Coverage B (Other Structures) limit in the homeowners policy will apply, and it's crucial to ensure this limit is adequate to cover the replacement cost of all structures it intends to protect, both on and away from the residence premises if applicable.
• Replacement Cost Conditions: Standard replacement cost provisions typically apply. This often means the insurer will not pay the full replacement cost until the damaged property is actually repaired or replaced. There might also be a requirement to insure the structure to a certain percentage of its replacement value (commonly 80%) to receive full replacement cost.
• Introduction Date: This endorsement was introduced as part of the ISO 2022 Homeowners program revisions.
• Alternative Endorsement: The HO 04 91 endorsement provides ACV coverage for other structures away from the residence premises. The HO 06 91 is an upgrade to RC for buildings.

Key information for agents and underwriters

• Pricing: Attaching the HO 06 91 endorsement will generally result in an additional premium. This is because replacement cost coverage offers broader financial protection and represents a higher potential payout for the insurer compared to ACV.
• Risk Assessment: Underwriters should carefully evaluate the specific structures for which RC coverage is being requested. This includes their age, condition, construction materials, value, and usage. The location of these structures and their susceptibility to perils (e.g., wind, hail, vandalism if the property is infrequently occupied) are important underwriting considerations.
• Coverage Gaps and Counseling: Agents should clearly explain to the insured which structures at the other premises qualify as "buildings" under this endorsement and which do not. If valuable non-building structures exist, or if a specific building structure needs to be individually scheduled for replacement cost, other endorsements (like HO 06 92) or coverage approaches should be discussed. Ensuring the Coverage B limit is sufficient for the replacement cost of all covered other structures is vital.
• Underwriting Guidelines: Insurers will have specific underwriting guidelines regarding the eligibility of structures for this endorsement, potentially including age limitations, maintenance standards, and valuation methods. It is important to confirm that the structure meets these criteria before adding the endorsement.