Property Insurance Coverages and Policy Provisions
Policy structure
A homeowners policy has six coverages: A dwelling, B other structures, C personal property, D loss of use, E personal liability, and F medical payments to others. HO-3 insures the dwelling on an open-perils (special) basis and personal property for named perils; HO-5 is open perils on both; HO-4 renters and HO-6 condo unit-owners cover contents and improvements. Dwelling policies (DP-1 basic, DP-2 broad, DP-3 special) insure the building only, with no liability coverage.
Provisions that get tested
Replacement cost on the dwelling requires insuring to at least 80% of full replacement cost; fall short and the loss is settled at actual cash value. Special limits cap money, theft of jewelry, firearms, silverware, and business property. Additional coverages include debris removal, trees and shrubs, and credit card forgery. Loss of use pays additional living expense and fair rental value. The mortgagee clause protects the lender's interest regardless of the owner's acts. Flood is excluded from every property form and NFIP coverage generally has a 30-day waiting period.
Texas twists
Texas homeowners forms carry separate percentage windstorm and hail deductibles (often 1%, 2%, or 5%) applied to the Coverage A limit, not to the amount of the loss. Coastal wind coverage may be written through TWIA. Vacancy, unoccupied status, ordinance or law, and water backup are common exclusions unless endorsed.
Rule of thumb: percentage deductible x Coverage A = what the insured pays before the policy responds to hail. Trap: a 2% deductible on a $300,000 dwelling is $6,000, even on a small claim.