IV. Homeowners Insurance

Homeowners insurance comes in many different forms. From basic coverage to specific or complex coverage, this type of insurance provides protection for personal property in the event of a loss.

HO Type Coverage Covers Basis of Coverage
HO-1 Basic Fire, other buildings, and personal property Named Perils
HO-2 Broad Dwelling, other structures, personal property Named Perils
HO-3 Special Dwellings and other structures Named Perils
HO-4 Broad Tenant's personal property Named Perils
HO-5 Comprehensive Dwelling, other structures and personal property Open Perils
  • HO-3 covers on a risk-of-direct physical loss basis. All direct physical losses are covered except those losses specifically excluded.
  • HO-5 (comprehensive form) provides open perils coverage (“all risks coverage”) on the dwelling, other structures and personal property. All direct physical losses are covered except those losses specifically excluded
  • HO-6 (Unit-Owners Form) covers personal property on a named perils basis. A minimum of $5,000 of insurance is also provided on the condo unit that covers improvements and additions and certain other types of other property.
  • HO-8 (Modified Coverage Form) is specifically designed for older homes.

California FAIR Plans – special risk

A. Determination of Policy Amounts

Coverage A – Dwelling coverage amount determines (as a percentage of) all other Section I coverage
Section II basic limits are the same for all homeowner policies
Additional limits may be purchased as an endorsement. (Scheduled items)

Analysis of HO 3 policy (Special Form)
Persons insured – named insured & spouse, family members, persons under 21 in the care of the insured, full time student under 24 away from home.
Section I - five Basic Coverages
Coverage A- Dwelling up to 100% of policy limit
Coverage B – Other Structures – 10% of A
Coverage C- Personal Property – 50% of A
Coverage D- Loss of Use – 30% of A
Additional Coverages- see specific limits
Section II – Liability Coverages
Coverage E – Personal Liability ($100,000 per occurrence)
Coverage F – Medical Payments to Others ($1000 per person)
Exclusions (A & B):
Collapse, (except as covered under additional coverages)
Freezing of Plumbing, heating, air conditioning, auto fire sprinklers
Damage to pavements, patios, swimming pools, similar structures from ice, water pressure, freezing or thawing.
Theft of materials & supplies from construction site
Vandalism, malicious mischief, and glass breakage if dwelling is vacant for more than 60 days before loss
Mold, fungus or dry rot losses
Other exclusions (A,B, &C): ordinance or law; earth movement; water damage such as flood, sewer back up, seepage; power failure; neglect of insured; war, nuclear hazard; intentional loss; Government action; weather conditions excluded; failure to act by any person, group or government body; faulty, inadequate or defective planning.

Duties after a loss (file proof within 60 days)
Loss settlement- ACV, 80 % of replacement cost
Loss of pair or set, Appraisal clause,Other insurance & service, Suit against insurer, Insurer’s option to repair, or replace with like property, Loss payment,
Abandonment of property, Mortgage clause, Policy period, Concealment or fraud,
Waiver or change of policy provisions, cancellation, non-renewal, assignment, subrogation, death or insured or spouse.


Inflation guard
Personal property replacement cost settlement
Scheduled personal property
Personal injury
Watercraft & recreational vehicles
Home business insurance
Checklist for evaluating HO policies….

  • Homeowners:

What form? Is it the correct form coverage?
Limits for various coverage (A-F)
Increasing policy limits?
Personal property in excess of special limits?
Section I deductible?
Annual Premium?
Automatic coverage versus endorsements that are optional with other insurers

Homeowners endorsements:
Additional insureds; earthquake; flood
Credit card; fund transfer; forgery; counterfeit money; money; passport/tickets
Home business, home day care
Scheduled personal property
Increased ordinance or law coverage
Loss assessment coverage
Alarm or fire protection system credits
Sinkhole collapse, snowmobile, watercraft

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