5.3 Common Homeowners Endorsements (scheduled property, water backup, ordinance or law)

Arkansas Property & Casualty Insurance State

Track your progress as you read

Finished sections get a check mark.

1 Standalone Coverage Map

Standalone Coverage Map

2 Introduction: Arkansas Property & Casualty Insurance Exam Overview

Arkansas Property & Casualty Exam Overview

3 National Portion: Insurance Fundamentals

1.1 Risk, Hazards, Perils, and the Law of Large Numbers 1.2 Insurable Interest, Indemnity, and Other Insurance Principles 1.3 Insurance Contract Law and Elements 1.4 Policy Structure: Declarations, Insuring Agreement, Conditions, Exclusions 1.5 Parties, Agents vs. Brokers, and Authority

4 National Portion: Property Insurance Concepts

2.1 Causes of Loss / Named-Peril vs. Open-Peril 2.2 Valuation: ACV, Replacement Cost, and Functional Value 2.3 Coinsurance and the Coinsurance Formula 2.4 Deductibles, Limits, and Loss Settlement 2.5 Common Property Policy Conditions and Clauses

5 National Portion: Dwelling Policies (DP)

3.1 Dwelling Policy Forms DP-1, DP-2, DP-3 3.2 Dwelling Coverages A-E and Other Coverages 3.3 Dwelling Perils, Conditions, and Endorsements 3.4 Mobile Home and Specialized Dwelling Coverage

6 National Portion: Homeowners Policies - Forms & Section I

4.1 Homeowners Forms HO-2 through HO-8 and Eligibility 4.2 Section I Coverages A-D and Additional Coverages 4.3 Section I Perils Insured Against and Exclusions 4.4 Replacement Cost vs. ACV and Loss Settlement in Homeowners

7 National Portion: Homeowners Policies - Section II & Endorsements

5.1 Section II Coverages E (Liability) and F (Medical Payments) 5.2 Homeowners Conditions and Duties After Loss 5.3 Common Homeowners Endorsements (scheduled property, water backup, ordinance or law)

8 National Portion: Personal Auto Policy - Liability & Injury

6.1 Personal Auto Policy Structure and Eligibility 6.2 Part A Liability and Supplementary Payments 6.3 Part B Medical Payments 6.4 Part C Uninsured/Underinsured Motorists

9 National Portion: Personal Auto Policy - Physical Damage & Duties

7.1 Part D: Coverage for Damage to Your Auto 7.2 Exclusions and Part E: Duties After an Accident 7.3 Part F: General Provisions, Endorsements, and No-Fault Concepts

10 National Portion: Liability Insurance Concepts

8.1 Negligence, Torts, and Legal Liability 8.2 Defenses, Damages, and Vicarious Liability 8.3 Occurrence vs. Claims-Made Triggers 8.4 Bodily Injury, Property Damage, and Personal/Advertising Injury

11 National Portion: Commercial Property Insurance

9.1 Commercial Package Policy Structure and Common Policy Conditions 9.2 Building and Personal Property Coverage Form (BPP) 9.3 Causes of Loss Forms (Basic, Broad, Special) 9.4 Business Income and Extra Expense 9.5 Commercial Property Endorsements and the BOP

12 National Portion: Commercial General Liability - Coverages

10.1 CGL Coverage A: Bodily Injury and Property Damage Liability 10.2 CGL Coverage B: Personal and Advertising Injury, Coverage C: Medical Payments 10.3 Who Is an Insured and Supplementary Payments

13 National Portion: Commercial General Liability - Limits, Triggers & Exclusions

11.1 CGL Limits of Insurance and Aggregates 11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates 11.3 Key CGL Exclusions and Endorsements

14 National Portion: Commercial Auto Insurance

12.1 Business Auto Coverage Form and Covered Auto Symbols 12.2 Commercial Auto Liability and Physical Damage 12.3 Motor Carrier / Trucking and MCS-90 12.4 Garage Coverage Form and Garagekeepers 12.5 Commercial Auto Endorsements

15 National Portion: Workers Compensation

13.1 Workers Compensation Statutory Background and Benefits 13.2 Part One (Workers Comp) and Part Two (Employers Liability) 13.3 Premium Basis, Experience Modification, and Classification 13.4 Other States, USL&H, and Federal Acts 13.5 Workers Comp Exclusions and Endorsements

16 National Portion: Other Commercial Lines - BOP, Crime & Marine

14.1 Businessowners Policy (BOP) in Depth 14.2 Crime and Fidelity Coverage 14.3 Inland Marine and Nationwide Marine Definition 14.4 Ocean Marine Coverages (Hull, Cargo, Freight, P&I)

17 National Portion: Other Commercial Lines - Specialty & Professional

15.1 Farm and Agricultural Coverage 15.2 Commercial Umbrella and Excess Liability 15.3 Professional Liability and Errors & Omissions 15.4 Directors & Officers and Employment Practices Liability

18 National Portion: Other Commercial Lines - Surety, Flood & Specialty

16.1 Surety and Fidelity Bonds 16.2 National Flood Insurance Program (NFIP) 16.3 Cyber, Aviation, and Other Specialty Lines

19 National Portion: Insurance Regulation & Market Conduct

17.1 State Regulation, Licensing, and the McCarran-Ferguson Act 17.2 Rates, Forms, Solvency, and Guaranty Associations 17.3 Producer Authority, Fiduciary Duty, and Company Operations

20 National Portion: Ethics & Unfair Trade Practices

18.1 Unfair Trade Practices and Unfair Claims Settlement 18.2 Producer Ethics, Errors & Omissions Exposure, and Fiduciary Conduct 18.3 Privacy, Fraud, and Consumer Protection

21 Chapter 1: Arkansas P&C Insurance Regulation & Licensing

1.1 Arkansas Insurance Department 1.2 Arkansas P&C Producer Licensing Requirements 1.3 Arkansas Producer Responsibilities

22 Chapter 2: Arkansas Property Insurance

2.1 Arkansas Homeowners Insurance 2.2 Arkansas Commercial Property Insurance

23 Chapter 3: Arkansas Casualty & Auto Insurance

3.1 Arkansas Auto Insurance Requirements 3.2 Arkansas Liability Insurance 3.3 Arkansas Workers' Compensation Insurance

24 Chapter 4: Arkansas Ethics & Professional Conduct

4.1 Ethical Practices and Consumer Protection

5.3 Common Homeowners Endorsements (scheduled property, water backup, ordinance or law)

Key Takeaways Explain This Topic AI

Scheduled Personal Property (HO 04 61) adds open-peril, agreed-value, no-deductible coverage above special limits (e.g., $1,500 jewelry, $2,500 firearms theft).

Water Back-Up & Sump Overflow (HO 04 95) buys back sewer/drain back-up and sump overflow but never covers surface-water flooding - that needs a flood policy.

Ordinance or Law (HO 04 77) provides a percentage of Coverage A (e.g., 10/25/50%) for increased cost to rebuild to current building codes, plus demolition and debris removal.

Other key endorsements: Personal Property Replacement Cost (HO 04 90), Inflation Guard (HO 04 46), Identity Fraud Expense (HO 04 55).

Last updated: June 2026

5.3 Common Homeowners Endorsements (scheduled property, water backup, ordinance or law)

Endorsements amend the base HO policy to add, broaden, restrict, or schedule coverage. National exams expect you to recognize the ISO form number , what gap each endorsement fills, and the default sublimits it changes. The base HO 3 already includes special-limit sublimits on certain personal property; endorsements either raise those sublimits, schedule specific items, or add perils the base form excludes.

Scheduled Personal Property (HO 04 61)

The base policy imposes special limits of liability on theft-prone or high-value classes of personal property. Selected ISO defaults:

Property class Special limit (theft unless noted)
Money, bank notes, coins $200
Securities, deeds, manuscripts $1,500
Watercraft (incl. trailers/motors) $1,500
Jewelry, watches, furs (theft) $1,500
Firearms (theft) $2,500
Silverware, goldware (theft) $2,500

The Scheduled Personal Property Endorsement (HO 04 61) , also called a personal articles floater , lists specific items at an agreed value, removes them from these sublimits, drops the deductible , and broadens coverage to an open-perils / all-risk basis (mysterious disappearance is covered). It is the answer whenever a client owns a $20,000 engagement ring or a coin collection that the $200/$1,500 sublimits would gut.

Why scheduling matters - worked example

A client owns a $12,000 diamond ring. It is lost (not stolen - it slips off at the beach).

Unscheduled base HO 3: theft jewelry sublimit is $1,500, and mysterious disappearance is not a covered peril at all for unscheduled property - recovery $0 for a simple loss.

Scheduled under HO 04 61 at $12,000 agreed value, open-perils with no deductible: the insurer pays the full $12,000 .

The scheduling endorsement does three exam-tested things at once: raises the limit to the agreed value, broadens perils to open-peril, and removes the deductible.

Water Back-Up and Sump Overflow (HO 04 95)

The base HO policy excludes water that backs up through sewers or drains or overflows from a sump pump . The Water Back-Up and Sump Discharge or Overflow Endorsement (HO 04 95) buys this back, typically with a separate sublimit the insured selects (commonly $5,000, $10,000, or $25,000 ) and a separate deductible .

Trap to avoid: HO 04 95 covers water that backs up from the sewer/drain/sump . It does not cover surface-water flooding entering from outside (rising rivers, storm surge) - that exposure requires a separate flood policy (NFIP or private) . A basement that floods because a city sewer backs up = HO 04 95; a basement that floods because a creek overflows = flood policy.

Ordinance or Law (HO 04 77)

The base HO 3 excludes the extra cost to rebuild to current building codes . After a partial loss, modern codes may require the undamaged portion to be demolished , debris removed , and the structure rebuilt to code - costs the base policy will not pay. The Ordinance or Law Endorsement (HO 04 77) provides a percentage of Coverage A (e.g., 10%, 25%, 50% ) toward the increased cost of construction, demolition, and debris removal mandated by an enforced building law.

Worked example: A 1965 home with $300,000 Coverage A suffers a kitchen fire. Code now requires the entire structure be rewired and brought up to code at an extra $45,000 . With a base policy: not covered. With HO 04 77 at 25% : up to 0.25 x $300,000 = $75,000 is available, so the full $45,000 code-upgrade cost is paid.

Quick endorsement reference

Endorsement ISO form Gap it fills
Scheduled Personal Property HO 04 61 Open-peril, agreed-value, no-deductible coverage above special limits
Water Back-Up & Sump Overflow HO 04 95 Sewer/drain back-up and sump overflow (NOT surface flood)
Ordinance or Law HO 04 77 Increased cost to rebuild to current building codes
Personal Property Replacement Cost HO 04 90 Settles Coverage C at RCV instead of ACV
Inflation Guard HO 04 46 Automatically increases Coverage A limit during the term
Identity Fraud Expense HO 04 55 Expenses to restore the insured's identity

Personal Property Replacement Cost (HO 04 90) and Inflation Guard (HO 04 46)

By default, Coverage C (personal property) settles at ACV - replacement cost minus depreciation. The Personal Property Replacement Cost Endorsement (HO 04 90) changes Coverage C settlement to replacement cost with no deduction for depreciation, subject to the Coverage C limit. Certain classes (antiques, fine art, memorabilia, articles not maintained in good condition) stay on an ACV basis even with the endorsement.

The Inflation Guard Endorsement (HO 04 46) automatically increases the Coverage A limit (and related coverages pegged to A) by a stated annual percentage, applied pro-rata through the term, so a rising replacement cost does not silently erode the insured's compliance with the 80% coinsurance rule between renewals.

Liability and household endorsements

Section II is also commonly broadened by endorsement:

Personal Injury (HO 24 82) - adds coverage for offenses such as libel, slander, false arrest, and invasion of privacy , which the base bodily-injury/property-damage definition does not reach.

Home Business / Permitted Incidental Occupancies - narrows or extends coverage for limited in-home business activity; a full home business usually needs a separate businessowners policy.

Watercraft / Snowmobile - extends Section II liability to certain owned watercraft and recreational vehicles otherwise excluded.

Identity Fraud Expense (HO 04 55) pays the insured's expenses - notary, certified mail, lost wages, attorney fees - to restore their identity after a fraud event, typically subject to a modest sublimit (commonly $15,000 or $25,000) and a per-claim deductible.