Property Policy Coverage and Claims Handling
Reading the policy like a claim file
First-party property coverage is a sequence of gates, and every claim must clear them in order: is there a covered cause of loss; is the damaged property covered; what limit applies; what deductible and coinsurance apply; what conditions did the insured satisfy; and how is value measured?
Know the architecture: Coverage A dwelling, B other structures, C personal property, D loss of use, plus endorsements for ordinance or law, water backup, mold, and scheduled property. A typical HO-3 is open-peril (risk of direct physical loss) on the dwelling and named-peril on contents - a favorite exam trap. Compare replacement cost with actual cash value (replacement cost less depreciation), and remember recoverable depreciation is usually paid only after repair or replacement and within the policy's time limit.
Exclusions to know cold: earth movement, flood, water below the surface, wear and tear, deterioration, faulty workmanship, neglect, and intentional loss. Watch the ensuing-loss exception: an excluded cause followed by a covered peril (fire after an earthquake) may still be covered.
Conditions: prompt notice, cooperation, proof of loss, appraisal for disputes over amount, subrogation, and the contractual suit limitation - California's standard fire policy form carries a 12-month limit.
Worked example. RCV $40,000; depreciation $10,000; deductible $2,500. Initial ACV payment = 40,000 − 10,000 − 2,500 = $27,500. After documented completion of repairs, the $10,000 depreciation becomes recoverable.
Rule of thumb: coverage first, then amount - a perfectly priced estimate cannot rescue an uncovered cause of loss.