Property Insurance
The property family
Homeowners forms: HO-2 (broad named perils), HO-3 (open-peril dwelling, named-peril contents - the exam favorite), HO-4 renters, HO-5 comprehensive, HO-6 condo, HO-8 older homes. Coverages A through F: dwelling, other structures, personal property, loss of use, personal liability, medical payments to others. Dwelling policies (DP-1, DP-2, DP-3) insure structure and contents but contain no liability coverage unless endorsed.
Valuation and coinsurance
ACV equals replacement cost minus depreciation; replacement cost pays new-for-old up to the limit. Under a coinsurance clause, the insured shares the loss when the limit carried falls below the required percentage of value at the time of loss:
Payment = (limit carried ÷ limit required) × loss, never exceeding the limit.
Example: 80% coinsurance, replacement cost $500,000, limit $300,000, loss $100,000. Required = $400,000; 300,000 ÷ 400,000 × $100,000 = $75,000, a $25,000 penalty for underinsurance.
Exclusions and endorsements
Standard forms exclude flood and surface water, earth movement, ordinance-or-law costs, neglect, intentional loss, and wear and tear. Wind-driven rain entering through an opening the storm created is generally covered; storm surge is treated as flood. Business income and extra expense replace lost profits and continuing costs during the period of restoration. The mortgagee clause protects the lender even when the insured's own acts would defeat coverage.
Trap watch
Watch for open-peril versus named-peril switches, ACV answers when replacement cost was requested, and coinsurance questions that supply value at policy inception rather than at the time of loss.