3.2 Dwelling Coverages A-E and Other Coverages
Key Takeaways
- Dwelling policies use five lettered coverages: A Dwelling, B Other Structures, C Personal Property, D Fair Rental Value, and E Additional Living Expense.
- Coverage B (Other Structures) is automatically 10% of Coverage A and is additive to it, not a sublimit within it.
- Coverage C personal property limit defaults to a percentage of Coverage A (often 50%) and can be increased or reduced.
- Coverage D Fair Rental Value and Coverage E Additional Living Expense both respond only to a covered peril that makes the dwelling uninhabitable.
- Other Coverages such as Debris Removal, Reasonable Repairs, and Trees/Shrubs/Plants extend the policy without raising the Coverage A limit unless stated.
The Five Lettered Coverages
The dwelling program organizes property limits into five lettered coverages. Note that the dwelling forms use A through E for property, while Homeowners forms add Coverages L and M for liability. Understanding how each letter derives from Coverage A is essential, because raising or lowering the dwelling limit automatically resizes most of the others.
| Coverage | Name | What It Insures | Typical Relationship to A |
|---|---|---|---|
| A | Dwelling | The main residence and attached structures | Stated limit |
| B | Other Structures | Detached garage, shed, fence | 10% of A, additive |
| C | Personal Property | Insured's household contents | Often 50% of A |
| D | Fair Rental Value | Lost rent when unit is uninhabitable | 20% of A (form-specific) |
| E | Additional Living Expense | Extra cost of living elsewhere | Within D/E sublimit |
Coverage A: Dwelling
Coverage A is the foundation limit; every percentage-based coverage derives from it. It insures the dwelling on the described location, structures attached to it, and materials and supplies on or next to the premises used to construct, alter, or repair the dwelling. It does not insure land.
On DP-2 and DP-3 it settles on replacement cost subject to the 80% rule; on DP-1 it settles on ACV. A common trap: the cost to excavate, fill, grade, or stabilize land is never part of Coverage A even after a covered loss damages the soil. Building equipment and outdoor fixtures permanently attached to the dwelling, such as a central air unit, are included under Coverage A rather than Coverage C.
Coverage B: Other Structures
Coverage B insures structures separated from the dwelling by clear space, such as a detached garage, tool shed, or fence. The default limit is 10% of Coverage A and is additive: a $250,000 Coverage A automatically provides $25,000 of Coverage B on top of the dwelling limit, not carved out of it.
- Structures used for business are excluded unless solely for private garage use
- Structures rented to a non-tenant of the dwelling are excluded
Exam tip: Coverage B is additive, not a sublimit. A loss to the detached garage does not reduce the Coverage A limit available for the house.
Coverages C, D, and E
Coverage C (Personal Property) insures the insured's household contents, usually defaulting to a percentage of Coverage A (frequently 50% on owner-occupied forms). It can be increased for owner-occupants or removed entirely on rental dwellings where the owner keeps no contents on site. Certain property has internal sublimits, such as money, securities, and theft of jewelry or firearms.
Coverage D (Fair Rental Value) reimburses the landlord's lost rental income when a covered peril makes the rented portion uninhabitable, paying only the income lost during the reasonable time to repair or replace.
Coverage E (Additional Living Expense) pays the increase in living costs an owner-occupant incurs to maintain their normal standard of living elsewhere. Both D and E respond only to a covered peril, and together they typically share a combined limit expressed as a percentage of Coverage A.
Other Coverages
Beyond the lettered coverages, dwelling forms grant several Other Coverages that extend protection, usually without increasing the Coverage A limit:
- Debris Removal pays to remove debris of covered property after a covered loss
- Reasonable Repairs pays for temporary measures to protect from further damage
- Property Removed covers property moved to protect it from imminent loss, typically for 5 days
- Trees, Shrubs, and Plants pays a percentage of Coverage A (often 5%) with a per-item cap (such as $500), only for named perils like fire, lightning, vehicles not owned by the insured, and vandalism
Worked numeric: With $250,000 Coverage A, the 5% Trees/Shrubs/Plants limit is $12,500, but no single tree is paid above the $500 per-item cap.
The Coverage Letters and Their Limits
The Dwelling Policy organizes coverage by letter, and the percentages relative to Coverage A are frequent test items:
| Coverage | Insures | Typical relationship to Coverage A |
|---|---|---|
| A — Dwelling | The residence structure | Base limit |
| B — Other Structures | Detached garage, shed, fence | 10% of A (additional in DP forms) |
| C — Personal Property | Contents | Chosen by insured; can be a % or scheduled |
| D — Fair Rental Value | Lost rent if the dwelling is rented | Often 20% of A (DP-2/DP-3) |
| E — Additional Living Expense | Extra cost to live elsewhere | Included in DP-2/DP-3 |
In the DP-1, Coverage B is a percentage within Coverage A; in DP-2/DP-3, Coverage B is an additional amount of insurance.
Other Coverages and a Worked Allocation
Dwelling forms add several Other Coverages automatically, including debris removal, reasonable repairs, trees/shrubs/plants (limited, e.g., 5% of A with a per-item cap), fire-department service charge, and worldwide property-removal coverage.
Worked example: a DP-3 with Coverage A = $300,000. A windstorm destroys a detached garage ($25,000) and uproots two ornamental trees ($1,200 total). Coverage B provides up to 10% of A = $30,000 for the garage (loss fully paid, less deductible). The trees fall under the trees/shrubs Other Coverage, limited to 5% of A ($15,000) aggregate but only $500 per item, so each tree is capped at $500 = $1,000 paid, not $1,200. Trap: the per-item sublimit, not the aggregate, controls small landscaping claims.
A dwelling policy has $250,000 of Coverage A. A windstorm destroys the detached garage. How is the $25,000 of Coverage B applied?
On a $250,000 Coverage A dwelling, a covered fire destroys a single ornamental tree. The Trees, Shrubs, and Plants Other Coverage is 5% of Coverage A with a $500 per-item cap. What is the most paid for that one tree?