Property Insurance
Policy architecture
Homeowners forms are numbered by breadth: HO-3 (open peril on the dwelling, named peril on contents), HO-2 (broad named peril), HO-5 (comprehensive), HO-4 (renters), HO-6 (condo), HO-8 (older homes). Coverages run A dwelling, B other structures, C personal property, D loss of use, E personal liability, F medical payments to others. Coverage C is typically a percentage of Coverage A. Commercial property uses the BPP (building and personal property) form with causes-of-loss Basic, Broad, or Special, plus business income and extra expense.
Valuation and coinsurance
ACV = replacement cost minus depreciation; replacement cost requires repair or replacement and, on commercial forms, satisfaction of the coinsurance percentage. The coinsurance formula is (limit carried ÷ limit required) × loss, then subtract the deductible.
Worked example: a building valued at $200,000 with an 80% coinsurance clause requires $160,000. The insured carries $120,000 and suffers a $40,000 loss. 120,000 ÷ 160,000 = 75%; 75% × $40,000 = $30,000; less a $1,000 deductible = $29,000 paid.
Traps and exclusions
Flood and earthquake are excluded and need separate coverage; water damage from plumbing is covered but sewer backup usually is not. Vacancy (no people, no contents) restricts coverage far more than unoccupancy (people temporarily away). The mortgagee clause protects the lender even when the insured's own acts would bar recovery. Ordinance-or-law, earth movement, and neglect exclusions appear often, as do the differences between additional coverages and embedded coverage. Business income typically carries a 72-hour waiting period, and inland marine follows movable property wherever it goes.