Texas General Lines — Property and CasualtyPersonal LinesMedium
Which of the following is a key characteristic of the HO-8 Modified Coverage Form?
- AIt provides open perils coverage for both the dwelling and personal property.
- BIt provides coverage for the dwelling and personal property on an Actual Cash Value (ACV) basis.
- CIt primarily covers rental properties for landlords.
- DIt is designed for new homes with high replacement costs.
Show answer & explanationAnswer & explanation
Correct answer: B. It provides coverage for the dwelling and personal property on an Actual Cash Value (ACV) basis.
The HO-8 is designed for older homes where the replacement cost far exceeds the market value. To manage this disparity, it provides basic perils coverage, and losses for both the dwelling and personal property are settled on an Actual Cash Value (ACV) basis.
Why the other options are wrong
- A. Open perils is characteristic of HO-5 and the dwelling coverage of HO-3, not HO-8.
- C. HO-8 is for owner-occupied older homes, not primarily for rental properties (which would use DP forms or specific landlord policies).
- D. HO-8 is for older homes where market value is less than replacement cost.
HO-8 (Modified Coverage Form)
A Homeowners policy form designed for older homes where the replacement cost of the dwelling significantly exceeds its market value, providing basic perils coverage and Actual Cash Value (ACV) settlement for both dwelling and personal property.
- For older homes where replacement cost is high relative to market value.
- Provides 'named perils' coverage (similar to HO-1 or DP-1 basic perils).
- Losses are settled on an Actual Cash Value (ACV) basis.
- Often used when meeting strict building codes for replacement would be cost-prohibitive.
Memory trick: HO-8 is for 'Old Homes' needing 'ACV' for 'Basic' protection.