Dwelling and Homeowners Policy Coverage
Homeowners and dwelling coverage
Dwelling policies cover a dwelling and related private structures; homeowners policies add personal property, loss of use, personal liability, and medical payments. The standard HO-3 insures the dwelling for open perils and personal property for named perils; an HO-5 broadens personal property to open perils. Coverage A is the dwelling; Coverage B other structures; Coverage C personal property; Coverage D loss of use; Coverage E personal liability; Coverage F medical payments to others. Special limits apply to money, jewelry theft, firearms theft, silverware theft, and business property. Exclusions commonly include earth movement, flood, water backup (unless endorsed), neglect, intentional loss, and freezing while vacant. Replacement-cost coverage may pay full repair cost first, with recoverable depreciation held until repair.
Worked example
A burglar steals a $4,000 watch and $2,000 in cash from an HO-3. The policy has a $1,000 deductible and standard special limits: $1,500 for theft of jewelry and $200 for money. The cash is limited to $200; the watch is limited to $1,500. Covered total before deductible is $1,700. After the $1,000 deductible, $700 is payable. The insured cannot add the watch’s full value merely because it was scheduled-scheduling requires an endorsement or floater.
Traps
Do not apply the deductible before special limits. Do not assume flood or water backup is covered. Do not confuse Coverage B with Coverage C. Do not treat a rental dwelling as an HO-3 risk; it usually needs a dwelling fire or DP form.