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HO8 Policy (Home Insurance)
H08: The policy for older houses
Do you own a house older than 40 years? If yes, then you need a specific insurance policy, e.g. the H08. There are some important differences with other policies for homeowners, especially worth considering compared to a more common H03: let’s discuss so that you can finally decide if H08 is your case.
H08 is a basic homeowners insurance, like H01, H02, and H03. It is specifically tailored to meet the risk conditions associated with older houses, which don’t satisfy all of the update requirements that you would typically find with the other standard policies: HVAC (heat, ventilation, air conditioning), electrical system, hydraulic pipes, and roof. Generally, insurance companies ask these house components to be upgraded, in order to grant you the home coverages. You may be told, for instance, that units for the air conditioning attached to windows are allowed, while portable appliances being not, due to the peril of fire.
Instead, the main issue of older houses is that their replacement cost would be much higher than the ACV (actual cost value), due to obsolete materials or historical value, maybe having an architectural role, and that’s a big difference. If the home was built using materials no longer available/hard to find, like plaster, resuming the home with those would be overly pricey, even for insurers.
An HO-8 insurance policy comes in handy to deal with the above-mentioned issues.
An H03 policy covers the risk profile of modern houses, that have depreciation on the original cost of purchase, thus it would be cheaper to rebuilt/replace them with newer materials; on the other hand, old houses may have an increment in their value over time, and are considered at a higher risk of undertaking major damage.
H08 also makes eligibility easier: you can qualify with a lower credit score, than the one required by a standard H03, and you can be allowed to if you have had financial troubles or legal penalties, which are negative factors in the eyes of insurers.
What does H08 cover?
H08 is known in the insurance context as “modified form”. In fact, in comparison with H02, H03, and H05 it offers the same coverages: for dwelling, personal properties, liability, and loss of use, but it’s more limited overall.
You can choose dwelling coverage for two calculating methods:
-ACV (Actual Cash Value): this is the most affordable and adequate way to cover your old house. The company set an ACV both for ensuring you the nearest coverage to the purchase cost and for its convenience; in return, you have the lowest premium possible.
-Common construction: acts as a partial replacement cost. It means that a portion of your damaged house will be rebuilt/replaced with newer or commoner use materials, pound for the same square footage; it will cost you more than ACV.
-Full replacement cost: since this cost is prohibitive, the option is not feasible in most cases, if every: that’s the tradeoff of H08.
Another crucial point is that HO8 is a named perils policy: your home and belongings are covered only for the specific perils, that are listed. If a hazard that is not on the list should occur, you won’t be covered under the HO8 policy.
HO8 home insurance policy will protect both the house and personal properties against the following list of 10 perils:
- Fire, lighting
- Hail/storm
- Theft
- Explosion
- Smoke
- Riot/ civil concussion
- Vehicles (other people’s)
- Plane crash
- Vandalism or malicious mischief
- Volcanic eruption
As you can see, these are the most common perils, but there are a few, also important, not considered (needing additional coverage) in the HO8 policy:
- Water damage, including flood from natural events. This is a quite frequent claim and is about any source of water causing damage/loss: leaking or bursting pipes, flooding from an in-house appliance such as the washer or bathtub; rain infiltrating through the roof.
- Earthquake
- Hurricane
- Mold
- Falling objects: if a tree fell on your house due to neglect, then it’s not covered, unless you demonstrate it happened as a consequence of one of the listed perils, for instance, lightning that stroke it. This is also a common hazard.
- Power surges
- Tear and wear (requiring home warranty)
- Vandalism when off-premises
- Intentional damage
- Building code enforcement
Personal properties have their specific, and limited coverages: some items such as jewelry, artwork, money, stamps may require floaters if they are high-value. If you have business properties inside your living house, they may also be covered, with different amount caps depending on being on/off-premises. Some examples are: anywhere around $1,500 for jewels, $2,500 for business equipment (on-premises), typically $200 for cash/gold.
How much is H08 insurance?
- Premiums for an H08 policy are a lot different from State to State and depend strictly on the value and size of your house. Compared to the more traditional H03, annual rates are lower in the face of a more limited coverage overall.
Do you need an H08 policy?
a) If you are unable to get an HO-3 policy because you own a home aged 40+years, that would be too much costly to replace to the same standard, or not meeting the more common policies (H02, H03, H05) requirements. Some elements, if not the whole of the house are just difficult to insure.
b) have poor credit, therefore you are not seen as reliable on paying the annual premium, and don’t qualify for obtaining insurance otherwise;
c) you are or have been in a financial condition (bankruptcy, etc.) or legal (e.g.under judgment) so as to deny you the other policies.
Any of these would be sufficient to opt for an H08 home insurance policy, that will provide you the needed protection for your home and belongings. However, understand and remember it can only be a partial coverage.
Stay safe and buy smartly!