Which type of coverage must be added as an endorsement for replacement cost in homeowners policies?

Replacement cost coverage in homeowners insurance policies allows policyholders to receive compensation based on the current cost to replace their damaged or destroyed property with new, similar items, rather than the actual cash value, which factors in depreciation. In many standard homeowners policies, this replacement cost coverage is not automatically included and requires an endorsement.

The option stating HO-802/804 refers to specific endorsements that add replacement cost coverage for personal property and structure, making it a necessary addition for homeowners who want to ensure they can fully replace their insured items without a deduction for depreciation. This distinction is crucial for policyholders who wish to mitigate the financial impact of losses should they occur.

The other choices relate to different types of coverage or endorsements not specifically designed for replacement cost, which makes the HO-802/804 the right choice for enhancing a homeowners policy to include replacement cost coverage. Understanding the specific needs and conditions of a policy is integral in ensuring adequate protection and benefits in the event of a homeowner's claim.