Homeowners and Residential Property Coverages
The form and its parts
Learn the HO forms by distinguishing what they cover: HO-2 (named perils), HO-3 (open perils on the dwelling, named perils on personal property), HO-5 (open perils throughout), HO-4 (renters), HO-6 (condo), HO-8 (older homes, functional replacement cost). Coverages run A (dwelling), B (other structures), C (personal property), D (loss of use/fair rental value), E (personal liability), F (medical payments to others).
Additional coverages are the exam's favorite minor math: debris removal, trees and shrubs (typically 5% of Coverage A with a per-item cap), reasonable repairs, and $200/$1,500/$2,500-type special limits on money, securities, theft of jewelry, theft of firearms, and silverware. Always verify the edition's actual limits.
Exclusions and conditions
Earth movement, flood, ordinance or law, neglect, intentional loss, and governmental action are excluded; mold is capped, and repeated seepage over a period of weeks is not a sudden accidental discharge. Vacancy (commonly 60 days) and the business-pursuit exclusion appear frequently.
The replacement cost condition typically requires insurance to at least 80% of the dwelling's replacement cost for full RC settlement. Fall below that and the loss is settled at the greater of ACV or a proportional RC payment. Recoverable depreciation is withheld until repair.
Worked example - insurance to value
Dwelling RC $400,000; 80% requirement = $320,000; carried $240,000; covered loss $80,000. Payment = ($240,000 ÷ $320,000) × $80,000 = $60,000, less deductible. Paying the full $80,000 would waive the RC condition.
Rule of thumb: for any HO loss, check value, deductible, special limits, and exclusions before discussing dollars with the insured.