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Chapter 3 Recap

Complete Summary of Property Policies

Part 1 Personal Lines: Dwelling & Homeowners

Dwelling Policies (DP)

For landlords who DON'T live in the property. No liability included (add by endorsement).

DP-1 Basic

Named perils only, ACV, most limited

DP-2 Broad

More perils, RC for dwelling, ACV contents

DP-3 Special

Open perils dwelling, named perils contents

Homeowners Policies (HO)

For owner-occupants who LIVE in the home. Includes liability (Section II).

HO-2 Broad

Named perils, dwelling & contents

HO-3 Special

Most common! Open perils dwelling

HO-4 Renters

Contents only, no building

HO-5 Comprehensive

Open perils on EVERYTHING

HO-6 Condo

Unit owner coverage, walls-in

HO-8 Modified

Older homes, functional RC

Standard Coverage Letters

A

Dwelling

B

Other Structures

C

Personal Property

D

Loss of Use

E/F

Liability/Medical

Part 2 Commercial Property

Key Concepts

  • - BPP = Business Personal Property (contents)
  • - 60-day vacancy = No vandalism, 85% on other claims
  • - 80% coinsurance = Must insure at least 80% of value
  • - Extensions = ADD to policy limit
  • - Additional = USE existing limit

Causes of Loss Forms

  • - Basic = Fire, lightning, explosion, etc. (11 perils)
  • - Broad = Basic + falling objects, weight of ice/snow
  • - Special = Open perils (all risks except excluded)

Business Income Coverage

72-Hour Wait

Coverage starts after 3 days

Extended BI

60 days after reopening

Civil Authority

Govt closes area, 30 days max

CPP (Commercial Package)

Build your own - select coverages you need. Has coinsurance.

BOP (Businessowners)

Pre-packaged for small business. NO coinsurance!

Part 3 Inland Marine

What is Inland Marine?

  • - Coverage for mobile property and goods in transit
  • - NAIC Nationwide Marine Definition guides classification
  • - Floaters = scheduled items with agreed value
  • - $100 jewelry limit per article (homeowners)

Commercial IM Types

  • - Filed = Standard rates filed with state
  • - Unfiled = Negotiated, large risks
  • - Builders Risk = Construction projects
  • - Bailee = Property in your care

Part 4 Specialty: Flood & Earthquake

Flood Insurance (NFIP)

  • - 30-day waiting period (exceptions: new loan)
  • - Max: $250K dwelling / $100K contents
  • - SFHA = Special Flood Hazard Area (required)
  • - WYO = Private insurers sell NFIP policies
  • - Community MUST participate in NFIP

Earthquake Insurance

  • - Percentage deductibles (10-20% of coverage)
  • - NOT included in standard policies
  • - Fire following earthquake IS covered
  • - CEA = California Earthquake Authority
  • - DIC policies fill coverage gaps

Key Numbers to Memorize

30

Days - NFIP wait

60

Days - vacancy limit

72

Hours - BI wait

80%

Coinsurance req.

$250K

NFIP dwelling max

$100K

NFIP contents max

10-20%

EQ deductible

$100

Jewelry per article

85%

Vacant claim payout

5

Max boarders (DP)

10%

Other structures (B)

50%

Personal prop (C)

Named Perils vs Open Perils

Named Perils

Only covers perils specifically listed in policy.

Insured must prove loss was from a named peril.

Open Perils (Special)

Covers ALL perils EXCEPT those specifically excluded.

Insurer must prove exclusion applies.

Exam Trap Alerts

Dwelling vs Homeowners

DP = landlord (doesn't live there). HO = owner-occupant (lives there).

Vacancy Exclusion

After 60 days vacant: NO vandalism coverage, other claims pay 85%.

BOP Has No Coinsurance

Unlike CPP, BOP doesn't penalize for underinsurance. Exam loves this!

Fire Following Earthquake

Fire FROM earthquake IS covered by standard policy. EQ itself is NOT.

NFIP Community Requirement

Community must participate in NFIP for residents to buy flood insurance.

Extensions vs Additional

Extensions = extra money. Additional = uses existing limit.

Chapter 3 Complete!

You've mastered the types of property policies. Ready to continue?

Continue to Chapter 4 →