Dwelling and Homeowners Policies
The forms
Dwelling policies (DP-1, DP-2, DP-3) insure the dwelling itself; DP-3 is open peril on the dwelling. Homeowners forms: HO-2 broad, HO-3 special (open peril on dwelling and other structures, named peril on personal property), HO-5 comprehensive (open peril on both), HO-4 renters (contents and liability, no building), HO-6 condominium unit-owners, HO-8 modified for older homes.
Coverage structure
Coverage A dwelling; B other structures (usually 10% of A); C personal property (50–70% of A); D loss of use (about 30% of A); E personal liability; F medical payments to others. Coverage D pays additional living expenses above normal costs.
Limits and traps
Memorize special limits: cash, money, jewelry and silverware theft, business property at home, and property of others. Theft away from the residence is limited. Replacement cost on contents often requires insuring to 80% of Coverage A. Key exclusions: flood, earth movement, neglect, intentional loss, business pursuits, and vehicles licensed for road use. Theft is not covered in a vacant home.
Rule of thumb: HO-3 = open peril building, named peril contents; HO-5 = open peril on both. If an HO-3 question asks about an unusual cause of damage to contents, the answer is usually no coverage.
Worked example: A windstorm breaks a window and rain damages the carpet. Because the water entered through an opening created by a covered peril, the resulting damage is covered under proximate cause.