What Perils Are Covered by Special Form Home Insurance?
It covers your house against every cause of loss except the ones your policy specifically excludes, like flood or earthquake.
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Special form coverage works by exclusion, not by a list of named perils, so the exclusions page tells you more than the coverage summary does. Every policy leaves out flood and earthquake. Most also leave out sewer backup and mold damage unless you add them back as separate coverage. Before closing, ask what's excluded on the actual policy you're buying, not what's typical, since insurers differ on these smaller items and your lender only checks that the dwelling amount is sufficient.
Two policies can carry the same coverage and still exclude different things, at different deductibles, for a different price. One quote might skip sewer backup coverage entirely. Another might include it but set the dwelling amount too low to rebuild the house at today's construction costs. Checking more than one before closing is the only way to catch those gaps while there's still time to fix them.
Does special form cover belongings, or just the structure?
Special form sets the rules for the building itself, what's usually called dwelling coverage. It's an open-perils form for the structure, meaning anything not excluded is covered. Your personal property, the furniture, clothes and everything else you own, sits on a separate line on the same policy, and it almost always works the opposite way. Most policies insure personal property on a named-perils basis, meaning only the causes of loss listed are covered. Check the declarations page for two different coverage letters, usually A for the dwelling and C for personal property, and read the personal property section on its own instead of assuming it matches the dwelling exclusions.
A pipe bursts and soaks the drywall and the carpet. The drywall is part of the dwelling, covered on an open-perils basis. The carpet and anything it ruined, a rug, a couch, boxes stored in a closet, falls under personal property instead. That gets covered only if water damage from a burst pipe is one of the named perils on that part of the policy. It usually is. The gap shows up with things like mold that grows after the water sits for a few days, or items damaged by a cause that isn't on the named list.
Other structures on the property, a detached garage, a shed, a fence, typically get their own coverage line too, often a percentage of the dwelling amount rather than a number set separately. Anyone buying a house with outbuildings should check that this amount is actually enough to rebuild them, not just whatever percentage the policy defaults to.
None of this changes what happens before closing. The lender wants proof the dwelling is insured for enough to rebuild it, and that's the number special form protects. Once that's settled, it's worth five minutes to see how personal property is covered on the same policy, since that's the part that pays out when something inside the house, not the house itself, gets damaged or destroyed.
What should I know about the deductible before I sign anything?
Every special form policy has a deductible, the amount subtracted from a claim payout before the insurer pays the rest. If a pipe bursts and the repair costs more than the deductible, the payout covers the difference. It applies per claim, not per year, so a second claim in the same year means paying the deductible a second time.
Most policies let the buyer choose the deductible amount, and a higher deductible generally lowers what the policy costs. Before closing, it's worth thinking through what cash would actually be on hand to cover that amount if something went wrong the week after moving in. A lower price on the quote isn't worth much if the deductible itself would be hard to pay when a claim actually happens.
Wind and hail sometimes carry a separate deductible from the rest of the policy, and it's often written as a percentage of the dwelling amount rather than a flat dollar figure. That percentage applies to the dwelling coverage number, so it can come out to a much larger amount than the standard deductible, even on an otherwise ordinary policy. This shows up most in states that see hurricanes or severe hail, and it's easy to miss because it sits in a different part of the policy than the main deductible. The declarations page should list it on its own if it applies, and it's worth asking about directly if it isn't obvious.
None of this affects what the lender needs to close. The lender checks the dwelling amount, not the deductible. But the deductible is the number that matters most the first time a claim gets filed, and it's set at the time of purchase, not something to find out about later. Comparing this figure alongside the price and the exclusions, rather than price alone, is what keeps the choice from turning into a surprise down the road.
Before you sign
Pull up the declarations page. Find the dwelling coverage number and the deductible, including any separate one for wind or hail, and compare both across quotes instead of just the price.
