Dwelling and Homeowners Policy Coverage
Forms and coverage parts
Homeowners forms are numbered by breadth. HO-3 insures the dwelling on a special, open-peril basis and personal property on a broad named-peril basis. HO-5 is special on both. HO-2 is broad form, HO-4 is renters, HO-6 is condominium unit owners, and HO-8 is a modified form for older or higher-risk homes. Coverage A is the dwelling, B other structures, C personal property, D loss of use, E personal liability, and F medical payments. Dwelling policies (DP-1, DP-2, DP-3) serve risks such as rental dwellings and secondary homes that do not fit a homeowners program.
Loss settlement and exclusions
Dwelling replacement cost coverage commonly requires the insured to carry at least 80% of full replacement cost; otherwise settlement may be reduced. Personal property is often actual cash value unless replacement cost is endorsed. Special limits apply to jewelry, money, firearms, and silverware. Typical exclusions include flood, earth movement, ordinance or law, neglect, intentional loss, and repeated seepage. In coastal North Carolina, wind and flood coverage may require separate windstorm or National Flood Insurance Program coverage; do not assume a homeowners policy covers storm surge.
Worked example
A covered kitchen fire causes $40,000 in dwelling damage. Replacement cost is $40,000, depreciation is $8,000, and the deductible is $2,000. The initial actual cash value payment is $40,000 - $8,000 - $2,000 = $30,000. After repairs are completed, the insured may claim the $8,000 recoverable depreciation, subject to the policy's conditions.
Traps
Do not apply the deductible twice on a single loss. Do not assume matching undamaged shingles or siding is always owed; the form and applicable law control. A jewelry theft is subject to special limits, not the full Coverage C limit. Flood is not a homeowners peril.