Property Insurance Basics and Coverages
Named perils versus open perils
The single most tested distinction is breadth. A named-peril form covers only listed causes of loss; an open-peril ("special") form covers everything except exclusions. On the homeowners side, HO-2 is broad named peril, HO-3 gives open peril on the dwelling and named peril on personal property, HO-5 gives open peril on both, and HO-8 is the modified form for older homes where market value differs from replacement cost. Dwelling forms (DP-1, DP-2, DP-3) work the same way. Read the question's stem for which coverage part a loss hits - Coverage A (dwelling), B (other structures), C (personal property), D (loss of use) - because the perils and limits differ by part.
Valuation and coinsurance
Commercial property uses a coinsurance clause; homeowners replacement-cost coverage uses an 80% requirement with a reduced-payment penalty. Both punish underinsurance proportionally, not dollar-for-dollar.
Worked example: a building has a $1,000,000 replacement cost, an 80% coinsurance clause, and $600,000 of insurance carried. Required insurance is $800,000, so the insured is at 75% (600,000 / 800,000). A $100,000 covered loss pays 0.75 x $100,000 = $75,000, then the deductible applies.
Other tested mechanics
Debris removal, trees and shrubs, collapse, and fire department service charges are additional coverages with their own small limits. Also know subrogation, appraisal for disputed values, mortgagee clause rights (the lender is paid even if the insured's conduct voids coverage), other insurance pro rata sharing, vacancy versus unoccupancy, and inflation guard.