3.2 Dwelling Coverages A-E and Other Coverages

The Five Numbered Coverages

Every DP form organizes limits into the same lettered structure. The dollar relationships among them are heavily tested because several are percentages of Coverage A.

How Coverage B Works

Coverage B equals 10% of Coverage A as an additional amount of insurance, so a $300,000 dwelling carries an automatic $30,000 on other structures — it is not subtracted from Coverage A. A key restriction: structures rented to others or used for business are excluded unless used solely as a private garage.

Coverage D vs. Coverage E (the classic confusion)

• Coverage D – Fair Rental Value applies when a rented portion of the premises becomes uninhabitable from a covered peril; it pays the lost rent minus expenses that do not continue.
• Coverage E – Additional Living Expense applies when the owner-occupant must live elsewhere; it pays the increase in living costs (hotel, meals above normal).
• Both D and E are limited to the time reasonably required to repair or replace — not a fixed calendar period — and neither is subject to a deductible.

Exam trap: Tenant displaced from a rental → owner collects Coverage D. Owner displaced from their own home → owner collects Coverage E. The peril must be covered for either to respond.

Other Coverages (Additional Coverages)

These sit on top of the lettered limits and rarely reduce them:

• Debris removal — cost to clear covered debris; included within the limit but an extra 5% if the limit is exhausted.
• Reasonable repairs — temporary repairs to protect from further loss.
• Property removed — covered against direct loss for 5 days while being moved from endangered premises.
• Fire department service charge — up to $500 with no deductible.
• Worldwide property (when Coverage C applies) — personal property anywhere, with a sublimit on property usually at another residence.
• Trees, shrubs, plants — limited named perils, capped (commonly 5% of Coverage A, $500 per item); wind and disease are NOT covered perils for plants.
• Collapse (DP-2/DP-3) — sudden collapse from specified causes such as hidden decay or weight of contents.

Worked ALE example

A fire makes an owner-occupied DP-3 home unlivable. The family's normal monthly expenses run $4,000; while displaced they spend $6,500 per month on a rental plus meals. Coverage E pays only the increase: $6,500 − $4,000 = $2,500 per month, for the time reasonably required to repair, capped at 20% of Coverage A. On a $300,000 dwelling that ceiling is $60,000.

Coverage C Specifics

Coverage C insures the named insured's household personal property anywhere in the world. On a dwelling rented to others, Coverage C may be a small amount covering the landlord's appliances and maintenance equipment rather than tenant belongings.

Several categories carry special sublimits, mirroring the Homeowners pattern: money and securities, jewelry and watches against theft, silverware against theft, and firearms against theft each have a capped dollar amount. Property of roomers and boarders not related to the insured is excluded, as are animals, birds, fish, and motor vehicles (except those used to service the residence, like a riding mower).

Reading the 10% / 20% Relationships

A frequent exam item gives a Coverage A limit and asks for the automatic amount on B, D, or E. Anchor everything to A:

• Coverage B = 10% of A (additional insurance).
• Coverage D = 20% of A on DP-2/DP-3 (10% on DP-1).
• Coverage E = 20% of A on DP-2/DP-3.

So a $250,000 DP-3 dwelling carries an automatic $25,000 Coverage B, $50,000 Coverage D, and $50,000 Coverage E. These percentages are defaults the insured can raise for an additional premium, but they are the answer when the question gives no other limit.

Exam tip: Coverage B is an additional amount — it does not erode Coverage A. Coverages D and E share the same 20% ceiling but respond to different claimants (landlord vs. owner-occupant).

The 10%/20% Relationships

On the dwelling forms, several limits derive from Coverage A: Coverage B (Other Structures) is typically 10% of A, Coverage C (Personal Property) a stated percentage, and Coverage D (Fair Rental Value) / Coverage E (Additional Living Expense) are stated percentages of A. These percentages are additional amounts of insurance on some forms, not carved out of A. Knowing that Other Structures defaults to 10% of Coverage A is a recurring numeric question.

Coverage D vs. Coverage E

• Coverage D – Fair Rental Value reimburses a landlord for lost rent when the rented portion is uninhabitable after a covered loss.
• Coverage E – Additional Living Expense reimburses an owner-occupant for the extra cost of living elsewhere (hotel, meals) above normal expenses.

The classic trap: lost rental income (landlord) = Coverage D; the displaced owner's hotel bills = Coverage E. Both are limited to the time reasonably required to repair.