The requirements of a property insurance policy for the insurable improvements of the property securing a mortgage loan are as follows:
The coverage must protect against loss or damage from fire, windstorm, hurricane, hail, and other hazards covered by the standard extended coverage endorsement.
If the property insurance policy includes such limitations and exclusions, the borrower must obtain a separate policy or endorsement from another insurer that provides adequate coverage for the limited or excluded peril.
The coverage must provide for claims to be settled on a replacement cost basis.
Also see B-2-02, Property Insurance Requirements for Mortgage Loans Secured by a One- to Four-Unit Property and B-2-03, Property Insurance Requirements for Mortgage Loans Secured by a Unit in a PUD, Condo, or Co-op for additional information.
For more information please see: B-2-01, Property Insurance Requirements Applicable to All Property Types.