Which homeowner form pays actual cash value only?

The option that pays actual cash value only is the homeowners form commonly referred to as HO-8. This form is specifically designed for older homes or homes that have unique characteristics that may not be adequately covered by other standard forms. The key feature of the HO-8 policy is its method of valuation, which calculates the actual cash value at the time of loss. The actual cash value is determined by taking the replacement cost and subtracting depreciation, which reflects the home’s current worth after accounting for wear and tear over time.

Unlike other forms that may cover losses on a replacement cost basis, the actual cash value coverage in the HO-8 form can be particularly beneficial for homeowners with older properties, as it helps ensure that they receive compensation commensurate to the property's depreciated value. Thus, the HO-8 is tailored for situations where policyholders understand that they may receive less money than what is needed to fully replace their damaged property.