Homeowners and Dwelling Insurance
Policy structure
Homeowners covers the dwelling (Coverage A), other structures (B), personal property (C), loss of use (D), personal liability (E), and medical payments to others (F). Coverage A usually floats B at 10%, C at 50–70%, and D at 30% of A; E and F are chosen separately. Section I is property; Section II is liability.
Forms
HO-2 broad named perils; HO-3 open peril on the dwelling and named peril on contents; HO-5 open peril on both; HO-4 renters (contents and liability, no Coverage A); HO-6 condo unit-owners (building items and loss assessment); HO-8 older homes with functional replacement cost. The dwelling policy (DP-1, DP-2, DP-3) covers property only, adds no liability unless endorsed, and suits rental or non-owner-occupied risks.
Exclusions candidates must know
Earth movement, flood and surface water, sewer backup (unless endorsed), ordinance or law, neglect, intentional loss, faulty planning or workmanship, and power failure originating off the premises. Loss of use pays additional living expense and fair rental value.
Section II
Coverage E pays damages for bodily injury or property damage the insured is legally liable for. Coverage F pays medical expenses to others without regard to fault, commonly $1,000–$5,000, and never pays the named insured or resident relatives.
Traps
Assuming HO-3 contents are open peril; forgetting that many forms require insuring the dwelling to at least 80% of replacement cost to avoid a reduced settlement; confusing loss of use with a landlord's fair rental value coverage.
Rule of thumb
Wind-driven rain is covered only when the wind first damages the building; rising water is always flood and needs a separate flood policy.