If a building insured under an HO-8 homeowners policy form suffers a total loss from a fire, how much does the insured owner of the building receive from the insurer?

When a building insured under an HO-8 homeowners policy form suffers a total loss, the insured owner will receive the actual cash value (ACV) of the building from the insurer. The HO-8 policy is specifically designed for older homes or homes that are not subject to standard replacement cost standards. Instead of providing coverage based on the replacement cost, which is typically the cost to rebuild or replace the structure with similar materials and standards, the HO-8 policy pays the actual cash value. ACV is calculated as the replacement cost minus depreciation.

This means that for a total loss situation, the owner would not receive funds to cover the full replacement cost, but rather an amount that reflects the value of the building at the time of the loss, which accounts for depreciation and other factors affecting its market worth. This aligns with the intent of the HO-8 form, which aims to provide coverage for homes that might not have adequate replacement costs due to their age or condition, thus reflecting the realities of insuring such properties.