1. Forms
2. HO
3. HO-07-56

What the form is

The HO 07 56, titled "Valuable Papers and Records Coverage Increased Limits," is an endorsement to a Homeowners Policy. It is specifically designed to be used in conjunction with the HO 07 01 Home Business Insurance Coverage endorsement. The primary function of this form is to increase the sub-limit of coverage for valuable papers and records related to the insured's home-based business. The standard HO 07 01 form typically provides a base limit for such items (e.g., $2,500), and the HO 07 56 allows the insured to purchase a higher, scheduled amount of coverage more aligned with the actual replacement cost of these critical documents.

Classes of business it applies to

This endorsement is relevant for any individual operating an eligible business from their home under an HO 07 01 endorsement where important physical documents are used and stored. Examples of such home-based businesses include, but are not limited to:

• Accountants or tax preparers (client files, financial statements)
• Architects or engineers (blueprints, drafts, plans)
• Attorneys (case files, legal documents)
• Consultants (research data, client reports)
• Writers or researchers (manuscripts, notes, historical documents)
• Medical billing services (patient records, billing statements - subject to privacy laws)

Essentially, any home business that would incur significant expense to reproduce or restore essential paper-based information if it were damaged or destroyed by a covered peril would benefit from this endorsement.

Special considerations

It is crucial to use this endorsement when the actual cost to research, restore, or reproduce vital business-related documents exceeds the standard coverage limit provided by the HO 07 01. When considering this endorsement, the insured should carefully evaluate the potential financial impact of losing their valuable papers.

• The coverage typically applies to the cost of blank materials and the labor required to transcribe or copy the records. It may not cover the intrinsic or intellectual value of the information if it's irreplaceable.
• This endorsement increases the limit of coverage. For broader peril coverage (e.g., open perils instead of named perils for valuable papers), the HO 07 57 – Special Coverage For Valuable Papers And Records endorsement might be more appropriate or used in conjunction.
• The valuable papers and records must be at the business location described on the HO 07 01 schedule for coverage to apply.

For instance, a home-based genealogist with years of irreplaceable research notes and client family trees might find the standard limit insufficient. While this endorsement helps with the cost of reproducing what can be reproduced, the genealogist should also have backup and preservation strategies.

Key information for agents and underwriters

Agents:

• Should proactively discuss the nature and specifics of the home business with the insured to identify any exposure related to valuable papers and records.
• Assist the insured in estimating the potential cost to reproduce their valuable papers to determine if an increased limit is necessary and, if so, the appropriate amount to schedule.
• Explain the difference between increasing the limit (HO 07 56) and broadening the covered perils (potentially HO 07 57).

Underwriters:

• When reviewing an application with this endorsement, assess the requested increased limit in relation to the type and scale of the home business. A business heavily reliant on physical documents (e.g., a sole practitioner lawyer) will present a different risk profile than a craft business primarily selling goods online.
• Verify that the business operations described are eligible under the HO 07 01.
• The premium for this endorsement will be based on the increased limit selected.
• Ensure clarity on what is defined as "valuable papers and records" within the policy context and the perils that apply to this coverage.