2022 Homeowners Insurance Changes: What Insurance Professionals Need to Know

By Anne Shropshire, CLU
Mar 1, 2022
2022 Homeowners Insurance Changes

Insurance professionals have been accustomed to using the 2011 edition of Insurance Services Office (ISO)’s homeowners policies. As of March 1, 2022, insurance professionals may begin using ISO’s new 2022 edition. The new 2022 homeowners insurance coverage forms contain several changes from the 2011 version, and now insurance producers and insurance adjusters should begin adapting to selling, underwriting, or adjusting claims on the 2022 edition.

Becoming an expert on the new 2022 homeowner coverage forms is also an excellent form of professional development for insurance practitioners and will help you quickly get a leg up on your competition. Although the new 2022 edition of ISO’s homeowners policies have an effective date of March 1, 2022, it is up to individual insurers to determine when or whether they will adopt the new edition.

Changes in 2022 Homeowners Coverage Forms

The core coverage of the new 2022 homeowners forms remains essentially the same as that of the 2011 forms. However, the format of the new policy forms has changed, and the definitions and various coverage provisions in all sections of the policy have been added, deleted, modified, or fine-tuned. This has been done in response to input from insurance practitioners and changes in the economic, legal, and social environment.

A few of the changes to the 2022 homeowners coverage forms include:

  • Policy format changes
  • Eligibility rules
  • Definitions changes
  • Changes to covered perils
  • Changes to property conditions
  • Changes to property and liability conditions

Each of these are listed in more detail below. Here we refer specifically to the Homeowners Policy Special Form 3 (HO 3), although identical or similar provisions generally appear in other homeowners forms.

For a detailed list of the 2022 changes in homeowners coverage along with their implications, insurance professionals can order WebCE’s new course, Homeowners 2022: What Changed?

Policy Format Changes

Insurance Services Office, Inc., (ISO) insurance policies historically used a double-column format. The design of new forms in the 2022 homeowners program has been amended to use a single-column format. Insurance practitioners might need a little time to get accustomed to this format. However, the new format should make it easier to read the forms on a computer screen.

With this revision, as is customary, ISO made a number of minor editorial changes to the wording of policies and endorsements that improve their consistency and clarity but are not intended to affect coverage. As long as changes were being made, endorsements that were updated for editorial reasons were also reformatted into a single-column format. Other endorsements unaffected by the editorial changes were also reformatted.

Eligibility Rule Changes

With the 2022 revision, ISO made no significant changes to the eligibility rules, with one exception. Applicants previously eligible for coverage under the Homeowners Policy Contents Broad Form 4 (HO 4) are now also eligible for coverage under the new Homeowners Policy Contents Comprehensive Form 14 (HO 14).

According to ISO rules, the same clients who were eligible for coverage under the 2011 program are also eligible for coverage under the 2022 program. Individual insurers, of course, might impose different underwriting criteria.

Definitions Changes

The Definitions section of most insurance policies is often one of the most overlooked. However, the way terms used in the policy are defined can have a major effect on which losses are or are not covered.

In revising the homeowners policy, ISO modified several definitions that affect coverage in various, often unrelated, parts of the policy. Some of the changes have the effect of restricting coverage, while others broaden it. The effects are sometimes subtle, but they can be significant in specific cases.

Changes to Covered Perils

Under the 2011 form, property coverage on the dwelling is excluded for vandalism, malicious mischief, and loss to glass or safety glazing material if the dwelling has been vacant for over 60 consecutive days just prior to the loss. However, a dwelling "being constructed" was not considered vacant. Questions arose as to whether a dwelling being remodeled, renovated, or repaired is "being constructed."

The 2022 policy explicitly states that a dwelling being remodeled, renovated, or repaired is not considered vacant. In other words, the term "constructed" is not limited to new ground-up construction. Depending on an insurer’s current underwriting or claims practices, this is either a clarification or a broadening of coverage.

Changes to Property Conditions

The 2011 form stipulates that if the repair or replacement cost is less than 5 percent of the limit of insurance on the building (and less than $2,500), then the loss will be settled on a replacement cost basis whether or not the repair or replacement is completed. Due to inflation, the $2,500 figure is increased to $5,000 in the 2022 form.

The 2011 form is silent regarding any pertinent deductible with respect to the application of the 80 percent insurance to value requirement. As a result, there have been inconsistencies in the manner in which adjusters apply the deductible. The 2022 form addresses this issue by reinforcing the application of the deductible prior to the proportional calculation. This is a clarification of coverage.

Changes to Property and Liability Conditions

The 2011 form allows insureds, before a loss, to waive in writing their subrogation rights against any person. The 2022 form enhances this right by explicitly allowing this waiver to include not just any person but also any organization. This change reflects the fact that the waiver of subrogation provision might sometimes apply to a condominium association or a homeowners association, which is not a person. Depending on an insurer’s existing claims practices as they relate to the 2011 homeowners forms, this is either a clarification or a broadening of coverage.

Do the 2022 Homeowners Coverage Changes Affect 2011 Policyholders?

Because the 2022 revisions include both broadenings and restrictions of coverage, the liberalization clause in the 2011 homeowners policy does not apply.

In other words, no policyholder is affected by the 2022 changes unless or until their older policy is replaced or renewed with the 2022 version.

Learn More About 2022 Homeowners Insurance Coverage Form Changes

To learn more about changes in the 2022 homeowners coverage forms, insurance professionals can order WebCE’s new course, Homeowners 2022: What Changed? This course is designed to meet the educational needs of insurance practitioners who are accustomed to working with the previous 2011 edition of ISO homeowners policies but must now adapt to the 2022 edition.

To order this course and more, visit the WebCE Catalog.