What percentage of replacement value must an Indiana homeowner maintain to receive full replacement cost benefits rather than actual cash value?

80%. If coverage is less than 80% of the home's current replacement value, claims are settled on an actual cash value basis, which takes depreciation into account. Maintaining at least 80% coverage ensures replacement cost settlements.

Under Indiana Code § 27-4-1-4.5, what are insurers required to do regarding claims?

Affirm or deny coverage within a reasonable time after proof of loss. Indiana law requires insurers to affirm or deny coverage within a reasonable time after proof of loss requirements have been completed and submitted by the policyholder. This is part of Indiana's good faith claims handling requirements.

Which of the following weather perils is NOT typically covered under a standard Indiana homeowners policy?

Flood damage. Flood damage is specifically excluded from standard homeowners policies in Indiana (and nationwide). Homeowners must purchase separate flood insurance through the National Flood Insurance Program (NFIP) or private insurers.

Key Takeaways

Indiana homeowners policies follow standard ISO forms with state-specific endorsements and IDOI regulations
The Indiana Department of Insurance (IDOI) requires insurers to handle claims promptly and in good faith
Replacement cost coverage requires at least 80% of current replacement value to avoid actual cash value settlements
Indiana experiences significant tornado and severe storm activity requiring adequate windstorm coverage
Flood insurance is not included in standard policies and must be purchased separately through NFIP or private insurers

Indiana Homeowners Insurance

Indiana follows national homeowners insurance standards with state-specific requirements regulated by the Indiana Department of Insurance (IDOI).

Standard Policy Forms

HO-3 Special Form (Most Common)

Coverage	Type	Typical Limit
A - Dwelling	Special (open perils)	Replacement cost
B - Other Structures	Special	10% of A
C - Personal Property	Named perils	50-75% of A
D - Loss of Use	ALE	20-30% of A
E - Liability	Occurrence	$100,000 - $500,000
F - Medical Payments	No-fault	$1,000 - $5,000

Indiana-Specific Requirements

IDOI Claims Handling Standards

Under Indiana Code § 27-4-1-4.5, insurers must:

Acknowledge and act reasonably promptly upon claims communications
Adopt reasonable standards for prompt investigation of claims
Affirm or deny coverage within a reasonable time after proof of loss submission
Attempt in good faith to effectuate prompt, fair, and equitable settlements

Replacement Cost Requirements

If coverage is less than 80% of current replacement value, claims are settled on actual cash value (taking depreciation). To receive full replacement cost benefits, policyholders must insure their dwelling at 80% or more of replacement value.

Indiana Weather Perils

Indiana experiences significant severe weather:

Tornadoes: Indiana averages 20-25 tornadoes annually
Severe thunderstorms: Hail, wind, and lightning damage
Winter storms: Ice, snow, and freezing damage

Exam Tip: Indiana requires insurers to handle claims in good faith and within a reasonable time. Failure to do so violates Indiana Code § 27-4-1-4.5 and can result in regulatory action.

Indiana Property & Casualty Insurance

1Introduction: Indiana P&C Insurance Exam Overview

2Chapter 1: Indiana P&C Insurance Regulation & Licensing

3Chapter 2: Indiana Property Insurance

4Chapter 3: Indiana Casualty & Auto Insurance