Property Insurance Basics
Policy architecture
The homeowners program runs Coverage A dwelling, B other structures, C personal property, D loss of use, E personal liability, and F medical payments to others. Learn the form differences: HO-2 broad named perils, HO-3 special/open perils on A and B but named perils on C, HO-5 open perils throughout, HO-4 renters (C and D only), HO-6 condo unit-owners, HO-8 modified coverage for older homes. Commercial property uses building and personal property coverage with basic, broad, or special causes-of-loss forms, specific or blanket limits, and coinsurance.
Valuation and additional coverages
Actual cash value versus replacement cost, where recoverable depreciation is withheld until repair or replacement is complete within the policy time limit. Know debris removal, trees and shrubs sublimits, loss of use, ordinance or law, limited mold, water backup, and collapse. Loss of use pays additional living expense (the increase in living costs) or fair rental value - not both, and not continuing mortgage principal.
Exclusions and California features
Standard property exclusions include earth movement, flood, neglect, intentional loss, wear and tear, faulty workmanship, and vacancy. California's Insurance Code §2071 establishes the standard fire policy baseline. Earthquake must be offered separately, typically through the California Earthquake Authority or a stand-alone policy, and the FAIR Plan is the residual market for hard-to-place property.
Traps
Watch for questions implying HO-3 treats personal property as open peril, that matching undamaged items is automatically owed, or that a percentage deductible applies to all perils rather than only the named peril (commonly wind).
Worked example
Replacement cost $40,000, ACV $28,000, deductible $2,000. Initial payment = $26,000; the $12,000 of recoverable depreciation is released only after documented repair.