Property insurance coverages
The exam expects you to read a homeowners or dwelling policy the way a working adjuster does: find the limit, find the peril, find the exclusion, then apply the sublimit.
Homeowners and dwelling structure
HO-2 (broad named perils), HO-3 (open peril on the dwelling, named peril on contents), HO-5 (open peril on both), HO-8 (functional replacement for older homes). Coverage A dwelling; B other structures (commonly 10% of A, generally part of - not in addition to - the A limit); C personal property (50% typical on HO-3, 70% on HO-5); D loss of use; E personal liability; F medical payments. Dwelling forms DP-1, DP-2 and DP-3 serve landlords and non-owner-occupied risks.
Perils, exclusions and sublimits
Typical exclusions: earth movement, flood and surface water, water backup (usually restored by endorsement), neglect, intentional acts, wear and tear, faulty workmanship. Special limits apply to jewelry, cash, silverware, firearms, business property and money. Additional coverages - debris removal, trees and shrubs, collapse, credit cards - sit inside or outside the limits exactly as the form states.
Worked example
Coverage A is $400,000, so Coverage B is $40,000. A detached shop burns with a $70,000 replacement cost. Only $40,000 is available under B; the remaining $30,000 is uninsured unless increased other-structures coverage was purchased. Do not add B on top of A - that is the single most common error.
Traps
Assuming HO-3 contents are open peril; calling a burst supply line "flood"; forgetting theft sublimits on jewelry; ignoring the loss-of-use time limit (often 12 or 24 months); applying commercial coinsurance to a homeowners form that contains none.