Property Insurance Coverages and Policy Provisions
Policy architecture
Homeowners forms divide into Section I (property) and Section II (liability): Coverage A dwelling, B other structures, C personal property, D loss of use, E personal liability, F medical payments to others. Know the difference between HO-3 (special/open-peril on the dwelling, broad named perils on contents) and HO-5 (open peril on both), plus HO-2, HO-4 (renters), and HO-6 (condo). Dwelling policies run DP-1 (basic named perils, ACV), DP-2 (broad named perils), and DP-3 (open peril on the dwelling).
Commercial property centers on the Building and Personal Property Coverage Form combined with a Causes of Loss form (Basic, Broad, Special), plus business income and extra expense, blanket vs. scheduled limits, and equipment breakdown.
Recurring exclusions
Flood (handled by the NFIP or private flood), earth movement, ordinance or law, neglect, wear and tear, and faulty workmanship. Watch for the ensuing loss exception, which restores coverage for a separate resulting peril (for example, a fire that follows a faulty repair).
Coinsurance worked example
An 80% coinsurance clause, $1,000,000 replacement cost, a $600,000 limit, and a $100,000 loss. Required limit = $800,000. Recovery = ($600,000 ÷ $800,000) × $100,000 = $75,000, less the deductible. If the limit equaled or exceeded $800,000, the full loss would be paid up to the limit.
Traps
Vacancy (typically 60 days) versus mere unoccupancy; percentage deductibles that apply to the Coverage A limit rather than to the loss amount; the mortgage clause protecting the lender even when the insured's own acts bar recovery; and pair-and-set provisions.