Property Insurance
The property framework
Property policies respond to direct physical loss to covered property, then apply exclusions, limits, and valuation. Know the homeowners structure: A dwelling, B other structures, C personal property, D loss of use, E personal liability, F medical payments to others. HO-3 covers the dwelling on an open-peril basis and personal property for named perils; HO-5 is open peril on both; HO-2 is broad named peril; HO-4 renters and HO-6 condo unit-owners cover contents and improvements, not the building shell. Dwelling policies (DP-1, DP-2, DP-3) serve rental and non-owner-occupied risks.
Perils, exclusions, endorsements
Commercial causes-of-loss forms run basic (named perils), broad (named plus weight of ice or snow, water damage, and similar), and special (open peril - risk of direct physical loss unless excluded). On a special form the insurer bears the burden of proving an exclusion applies. Standard exclusions: earth movement, flood and surface water, sewer backup (endorsable), ordinance or law, neglect, intentional loss, war, nuclear hazard, governmental action, and collapse outside the policy terms.
Valuation and coinsurance
ACV equals replacement cost minus depreciation. Commercial property coinsurance penalizes underinsurance. Payment = (limit carried ÷ limit required) × loss, capped at the policy limit. Compare the carried limit to the coinsurance percentage times the value at the time of loss.
Worked example
A building worth $1,000,000 carries an 80% coinsurance clause and a $600,000 limit. Required = $800,000. A $100,000 loss pays (600,000 ÷ 800,000) × 100,000 = $75,000, not $100,000.
Rule of thumb
Follow the claim path: covered property? covered peril? excluded? limit? valuation? deductible? Handle other-insurance clauses (pro rata or excess) and the mortgagee clause last.