Property Insurance
Structure and valuation
Homeowners forms run from the named-peril HO-2 and the broad HO-3 (open perils on the dwelling, named perils on contents) to the open-peril HO-5, the renters HO-4, the modified HO-8 for older homes, and the dwelling DP-1/DP-3. Coverages A through F address the dwelling, other structures, personal property, loss of use, liability, and medical payments. Special limits cap categories such as jewelry, cash, and silverware; scheduled endorsements remove those caps.
Valuation drives every settlement. Actual cash value is replacement cost less depreciation; replacement cost pays new-for-old but usually requires repair or replacement before the holdback is released. Commercial forms impose coinsurance and add business income coverage measured by the period of restoration, plus extra expense. Ordinance or law, debris removal, and flood (through NFIP or a private flood policy) are commonly excluded or sublimited.
Traps
- Forgetting percentage wind/hail or hurricane deductibles, which apply to the dwelling limit, not the loss.
- Treating loss of use (additional living expense plus fair rental value) as unlimited - most forms impose a time or dollar limit.
- Confusing matching of undamaged siding with covered direct physical loss.
- Overlooking the coinsurance penalty or the ACV/replacement-cost election for partial losses.
Worked example
A building valued at $800,000 carries a $600,000 limit with an 80% coinsurance clause. Required limit is $640,000. A $80,000 loss pays (600,000 ÷ 640,000) × 80,000 = $75,000, less the deductible.