Homeowners and Dwelling Insurance
Forms and what they cover
HO-3 (special form on the dwelling, broad named perils on contents), HO-2 (broad named perils), HO-5 (comprehensive), HO-4 (renters - contents and liability), HO-6 (condo), HO-8 (older homes, functional replacement cost). Coverages: A dwelling, B other structures (typically 10% of A), C personal property (a percentage of A), D loss of use (often 30% of A), E personal liability, F medical payments. Dwelling forms DP-1, DP-2, and DP-3 insure the structure only; they are not homeowners policies and exclude liability unless endorsed.
Limits and conditions to catch
- Special limits cap money, securities, jewelry and watches for theft, firearms for theft, silverware, business property, and electronics in vehicles.
- Replacement cost on contents is usually an endorsement, not automatic.
- Water from a burst pipe is covered; repeated seepage, flood, and surface water are not.
- Ordinance or law, sump pump overflow, and sewer backup need endorsements.
- A mortgagee clause protects the lender's interest independently of the insured's conduct.
Worked example
Coverage A is $300,000, so an 80% replacement-cost condition requires $240,000 of insurance. The insured carries $180,000. A kitchen fire causes a $60,000 covered loss with a $2,000 deductible. Payment = ($180,000 ÷ $240,000) × $60,000 = $45,000, less $2,000 = $43,000.
Traps
Treating special limits as deductibles; granting replacement cost on contents without the endorsement; assuming a homeowners policy covers flood, earth movement, or a home-based business; overlooking that Coverage B is a percentage of A, not an independent limit unless endorsed.