By Terrie Didier

Insurance policies can be complicated and sometimes require a flowchart to determine whether a
loss is or is not covered after considering the exclusions and the exceptions to the exclusions.
But some basic points for understanding insurance policies are discussed below.

• There are eight general forms of insurance policies: HO-1 (generally covers 10 named perils)
HO-2 (generally covers 16 named perils) HO-3
HO-4 (tenants) HO-5
HO-6 (condos)
HO-7 (mobile homes)
HO-8 (older homes – typically over 40 years old)
– Most common homeowner’s policy is called an HO-3. It covers the dwelling against all perils
unless specifically excluded. But the contents of your home are only covered against specific
perils listed in the policy.
– The HO-5 policy provides the most coverage. It covers both the dwelling and the contents for
all perils except perils specifically excluded.
– Both the HO-3 and the HO-5 policies include exceptions to the exclusions. For example, damage
from construction defects is generally excluded, but you may have coverage for damage to
non-defective elements of the home ensuing from the construction defect.

• General coverages in an HO-3 or an HO-5 policy:
– Dwelling (Coverage A).
– Other structures or building, such as a detached garage, work shed, or fencing
(Coverage B).
– Personal property (Coverage C) covers items other than the structure. Most insurance
companies set limits on certain items, like jewelry and firearms. The limit usually is very low,
between $250-$2,000. Scheduled personal property is optional protection you can add to your policy
to cover high-value items.
– Loss of use (Coverage D) is provided if your home is uninhabitable due to a covered loss.
– Personal liability provides a defense in the event of a lawsuit if you or a member of your
household is responsible for causing bodily injury or property damage to others.

• Specific coverages generally found under the “Additional Coverages” section of an HO-3 or an
HO-5 policy:
– Building Ordinance and Law coverage (BOL coverage) – covers the cost to comply with new
building codes or ordinances. Statutory default is 25% of the dwelling limit. A homeowner may
request no coverage or 50% coverage.
– Mold coverage – generally there is no coverage or limited mold coverage.
– Sinkhole coverage/Catastrophic ground cover collapse – Florida requires every insurer
authorized to sell property insurance in Florida to provide coverage for“catastrophic ground cover collapse” and to offer sinkhole coverage. Both types of coverage require
sinkhole activity and structural damage to the home, but catastrophic ground cover collapse
requires the additional elements of an “abrupt collapse” and that the building be condemned.
Florida defines sinkhole as “a landform created by subsidence of soil, sediment, or rock as
underlying strata are dissolved by groundwater. A sinkhole forms by collapse into subterranean
voids created by dissolution of limestone1 or dolostone2 or be subsidence as these strata are
dissolved.” If there is no limestone or dolostone, it is not classified as a sinkhole.
Sinkhole loss is defined as “structural damage to the covered building, including the foundation,
caused by sinkhole activity.”
“Structural damage” for both types of coverage is specifically defined in the statute. General
earth sinking, rising or shifting is excluded unless caused by specific perils
(fire or explosion). However, it may cover broken windows or storm doors that ensue from the earth
– Identity theft – some policies now provide a small amount for identity theft.
– Refrigerated products – some policies have small amount of coverage ($500) for this item, with
no deductible, as a consequence of power failure or mechanical breakdown.
– Loss assessment – some policies have a small amount of coverage ($1,000) if a homeowner’s
association makes an assessment as a result of a direct loss to the property owned by all members
collectively, and caused by a covered peril.
– Read your policy. There may be other coverages.

• If the value of your home has increased or you have made any major personal property purchases,
make sure you increase your policy limits accordingly.

• If you make structural renovations or additions to your home, you are required to notify your
insurance company.

• Review the documentation provided with your premium renewal. The coverage you have one year may
not exist the next year as a result of a new exclusion limiting coverage. Effective 2011, insurance
companies may make changes in policy terms if it provides a notice titled “Notice of Change in
Policy Terms.” A homeowner’s payment of the premium for the renewal policy containing the change is
deemed to be acceptance of the new policy terms. § 627.43141, Fla. Stat.

• Homeowner’s policies DO NOT cover flood loss. But your insurance company may write separate flood
coverage through the National Flood Insurance Program (NFIP).


1 Sedimentary rock composed mainly of calcium carbonate, usually in the form of calcite and, less
commonly, aragonite. It may contain considerable amounts of magnesium carbonate (dolomite).

2 Rock composed of the mineral dolomite. Dolomite: A very common mineral,
calcium magnesium carbonate occurring in crystals and in masses.

NFIP definition of flood covers more than one may think: “A general and temporary
condition of partial or complete inundation of two or more acres of normally dry land area or two
or more properties (at least one of which is your property) from: *Overflow of inland or tidal
waters; *Unusual and rapid accumulation or runoff of surface waters from any source; *Mudflow3; or
*Collapse or subsidence of land along the shore of a lake or similar body of water as a result of
erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels
that result in a flood as defined above.”