Study guide
4.1 Homeowners Forms HO-2 through HO-8 and Eligibility
Arkansas Property & Casualty Insurance State
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1 Standalone Coverage Map
Standalone Coverage Map
2 Introduction: Arkansas Property & Casualty Insurance Exam Overview
Arkansas Property & Casualty Exam Overview
3 National Portion: Insurance Fundamentals
1.1 Risk, Hazards, Perils, and the Law of Large Numbers 1.2 Insurable Interest, Indemnity, and Other Insurance Principles 1.3 Insurance Contract Law and Elements 1.4 Policy Structure: Declarations, Insuring Agreement, Conditions, Exclusions 1.5 Parties, Agents vs. Brokers, and Authority
4 National Portion: Property Insurance Concepts
2.1 Causes of Loss / Named-Peril vs. Open-Peril 2.2 Valuation: ACV, Replacement Cost, and Functional Value 2.3 Coinsurance and the Coinsurance Formula 2.4 Deductibles, Limits, and Loss Settlement 2.5 Common Property Policy Conditions and Clauses
5 National Portion: Dwelling Policies (DP)
3.1 Dwelling Policy Forms DP-1, DP-2, DP-3 3.2 Dwelling Coverages A-E and Other Coverages 3.3 Dwelling Perils, Conditions, and Endorsements 3.4 Mobile Home and Specialized Dwelling Coverage
6 National Portion: Homeowners Policies - Forms & Section I
4.1 Homeowners Forms HO-2 through HO-8 and Eligibility 4.2 Section I Coverages A-D and Additional Coverages 4.3 Section I Perils Insured Against and Exclusions 4.4 Replacement Cost vs. ACV and Loss Settlement in Homeowners
7 National Portion: Homeowners Policies - Section II & Endorsements
5.1 Section II Coverages E (Liability) and F (Medical Payments) 5.2 Homeowners Conditions and Duties After Loss 5.3 Common Homeowners Endorsements (scheduled property, water backup, ordinance or law)
8 National Portion: Personal Auto Policy - Liability & Injury
6.1 Personal Auto Policy Structure and Eligibility 6.2 Part A Liability and Supplementary Payments 6.3 Part B Medical Payments 6.4 Part C Uninsured/Underinsured Motorists
9 National Portion: Personal Auto Policy - Physical Damage & Duties
7.1 Part D: Coverage for Damage to Your Auto 7.2 Exclusions and Part E: Duties After an Accident 7.3 Part F: General Provisions, Endorsements, and No-Fault Concepts
10 National Portion: Liability Insurance Concepts
8.1 Negligence, Torts, and Legal Liability 8.2 Defenses, Damages, and Vicarious Liability 8.3 Occurrence vs. Claims-Made Triggers 8.4 Bodily Injury, Property Damage, and Personal/Advertising Injury
11 National Portion: Commercial Property Insurance
9.1 Commercial Package Policy Structure and Common Policy Conditions 9.2 Building and Personal Property Coverage Form (BPP) 9.3 Causes of Loss Forms (Basic, Broad, Special) 9.4 Business Income and Extra Expense 9.5 Commercial Property Endorsements and the BOP
12 National Portion: Commercial General Liability - Coverages
10.1 CGL Coverage A: Bodily Injury and Property Damage Liability 10.2 CGL Coverage B: Personal and Advertising Injury, Coverage C: Medical Payments 10.3 Who Is an Insured and Supplementary Payments
13 National Portion: Commercial General Liability - Limits, Triggers & Exclusions
11.1 CGL Limits of Insurance and Aggregates 11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates 11.3 Key CGL Exclusions and Endorsements
14 National Portion: Commercial Auto Insurance
12.1 Business Auto Coverage Form and Covered Auto Symbols 12.2 Commercial Auto Liability and Physical Damage 12.3 Motor Carrier / Trucking and MCS-90 12.4 Garage Coverage Form and Garagekeepers 12.5 Commercial Auto Endorsements
15 National Portion: Workers Compensation
13.1 Workers Compensation Statutory Background and Benefits 13.2 Part One (Workers Comp) and Part Two (Employers Liability) 13.3 Premium Basis, Experience Modification, and Classification 13.4 Other States, USL&H, and Federal Acts 13.5 Workers Comp Exclusions and Endorsements
16 National Portion: Other Commercial Lines - BOP, Crime & Marine
14.1 Businessowners Policy (BOP) in Depth 14.2 Crime and Fidelity Coverage 14.3 Inland Marine and Nationwide Marine Definition 14.4 Ocean Marine Coverages (Hull, Cargo, Freight, P&I)
17 National Portion: Other Commercial Lines - Specialty & Professional
15.1 Farm and Agricultural Coverage 15.2 Commercial Umbrella and Excess Liability 15.3 Professional Liability and Errors & Omissions 15.4 Directors & Officers and Employment Practices Liability
18 National Portion: Other Commercial Lines - Surety, Flood & Specialty
16.1 Surety and Fidelity Bonds 16.2 National Flood Insurance Program (NFIP) 16.3 Cyber, Aviation, and Other Specialty Lines
19 National Portion: Insurance Regulation & Market Conduct
17.1 State Regulation, Licensing, and the McCarran-Ferguson Act 17.2 Rates, Forms, Solvency, and Guaranty Associations 17.3 Producer Authority, Fiduciary Duty, and Company Operations
20 National Portion: Ethics & Unfair Trade Practices
18.1 Unfair Trade Practices and Unfair Claims Settlement 18.2 Producer Ethics, Errors & Omissions Exposure, and Fiduciary Conduct 18.3 Privacy, Fraud, and Consumer Protection
21 Chapter 1: Arkansas P&C Insurance Regulation & Licensing
1.1 Arkansas Insurance Department 1.2 Arkansas P&C Producer Licensing Requirements 1.3 Arkansas Producer Responsibilities
22 Chapter 2: Arkansas Property Insurance
2.1 Arkansas Homeowners Insurance 2.2 Arkansas Commercial Property Insurance
23 Chapter 3: Arkansas Casualty & Auto Insurance
3.1 Arkansas Auto Insurance Requirements 3.2 Arkansas Liability Insurance 3.3 Arkansas Workers' Compensation Insurance
24 Chapter 4: Arkansas Ethics & Professional Conduct
4.1 Ethical Practices and Consumer Protection
4.1 Homeowners Forms HO-2 through HO-8 and Eligibility
Key Takeaways Explain This Topic AI
HO-3 is the market standard: OPEN perils on the dwelling, NAMED perils on contents; HO-5 is OPEN on both.
HO-4 is renters (no Coverage A); HO-6 is condo unit-owners with a small built-in walls-in Coverage A (min $1,000).
HO-8 settles older homes on FUNCTIONAL replacement cost because RC far exceeds market value; theft limited to $1,000 on-premises.
Eligibility: owner-occupied 1-4 family for HO-2/3/5; tenant for HO-4; condo/co-op owner for HO-6; farms and pure rentals are NOT eligible.
Open perils = covered unless excluded (insurer proves exclusion); named perils = covered only if the cause is listed (insured proves it applies).
Last updated: June 2026
4.1 Homeowners Forms HO-2 through HO-8 and Eligibility
The ISO Homeowners Program is the single most heavily tested area on the national portion of a Property & Casualty exam. The current edition in wide use is the HO 2011 / HO 2022 program, identified by form numbers HO 00 02 through HO 00 08. The exam wants you to know three facts about every form: (1) who the policy is designed for, (2) the peril basis on the dwelling (Coverage A) and on contents (Coverage C), and (3) any special valuation rule. Master those three columns and most form questions answer themselves.
The Six Current Homeowners Forms
A "named perils" form covers a loss only if the cause appears on a listed schedule. An "open perils" form (also called "special" or "all-risk") covers every cause of loss except those specifically excluded — the burden shifts to the insurer to prove an exclusion applies.
- Form ISO No. Name Dwelling (Cov A) Contents (Cov C) Designed For
- HO-2 HO 00 02 Broad Form Named (broad) Named (broad) Owner-occupants wanting lower cost
- HO-3 HO 00 03 Special Form Open Named (broad) Standard owner-occupied home
- HO-4 HO 00 04 Contents Broad (Tenants) None Named (broad) Renters / tenants
- HO-5 HO 00 05 Comprehensive Open Open High-value owner-occupied home
- HO-6 HO 00 06 Unit-Owners Open (walls-in, $1,000 min) Named (broad) Condominium / co-op owners
- HO-8 HO 00 08 Modified Coverage Named (limited) Named (limited) Older homes; market value < RC
How to Memorize the Peril Basis
HO-3 is the benchmark : OPEN on the building, NAMED on contents. It is the most-sold owner-occupied form.
HO-5 is the upgrade : OPEN on BOTH building and contents — the broadest unscheduled coverage and most expensive.
HO-2 mirrors HO-3 but is NAMED on the building too — cheaper, narrower.
HO-4 and HO-6 carry the SAME contents named-peril list as HO-3/HO-2; HO-4 has no Coverage A, HO-6 has a small built-in Coverage A for unit improvements (minimum $1,000).
HO-8 Modified Coverage Form (the trap)
HO-8 exists for older or historic homes where the replacement cost far exceeds market value — a 100-year-old home with hand-plaster walls might cost $400,000 to replicate but sell for $180,000. Insuring it at full RC invites moral hazard, so HO-8:
Settles building losses on a functional replacement cost basis (common modern materials substitute for obsolete ones — drywall replaces plaster).
Uses a narrower named-perils list than HO-2 (theft coverage is limited to $1,000, and only on-premises).
Is NOT a low-cost gimmick; it is a tool when RC underwriting would otherwise decline the risk.
Eligibility Rules
A risk must qualify before any HO form attaches:
Owner-occupied dwellings of 1 to 4 families are eligible for HO-2, HO-3, HO-5 (the insured must occupy at least one unit; the others may be rented).
HO-4 requires the insured to be a tenant (no ownership of the structure).
HO-6 requires ownership of a condominium or cooperative unit.
Incidental occupancies (a home office, studio, or small private school) are permitted by endorsement.
A farm is NOT eligible for a homeowners form — it requires a Farmowners (FO) policy. A dwelling used only as a rental to others belongs on a Dwelling (DP) policy, not an HO form.
Why the peril basis drives premium
The broader the peril basis, the higher the premium, because the carrier assumes more uncertain exposures. An open-perils form covers causes nobody anticipated when the policy was written, so HO-5 costs the most, HO-3 sits in the middle, and HO-2 is cheapest among owner forms. The exam may phrase this as a producer recommending coverage to a budget-conscious buyer: the correct move is to match the form to the client's risk tolerance, not simply to sell the broadest contract. A producer who recommends HO-2 to save premium must document that the client understood the narrower contents and dwelling protection.
Reading a form-number question
Exam writers love to disguise a form question inside a fact pattern: a renter wanting contents coverage (HO-4), a condo owner needing walls-in protection (HO-6), or a buyer of a centuries-old home (HO-8). Anchor on the occupancy first — owner, tenant, or condo unit-owner — then on the valuation clue (market value far below replacement cost signals HO-8). Finally confirm the peril basis the scenario demands. Working in that order prevents the classic mistake of choosing HO-3 for a renter or HO-5 for a historic home that cannot be insured to full RC.