Section I Coverages A-D and Additional Coverages
Key Takeaways
- Section I provides four property coverages: A Dwelling, B Other Structures, C Personal Property, and D Loss of Use
- On HO-3, Coverage B defaults to 10% of Coverage A and Coverage C defaults to 50% of Coverage A, both as additive (not capped-within) limits
- Coverage C contains special internal sub-limits (e.g., $200 money, $1,500 jewelry/theft, $2,500 business property on premises) that cap recovery on certain property classes
- Additional Coverages such as Debris Removal, Reasonable Repairs, Trees/Shrubs/Plants, and the $500 Credit Card coverage provide extra protection that often sits above or alongside the main limits
The four Section I coverages
Section I of the Homeowners policy is the property half of the package. It has four coverages, lettered A through D.
| Coverage | What it insures | HO-3 default limit |
|---|---|---|
| A - Dwelling | The house itself, attached structures, materials/supplies on or next to the premises to build/repair the dwelling | Set by insured (e.g., $300,000) |
| B - Other Structures | Detached structures: detached garage, shed, fence, pool | 10% of Coverage A |
| C - Personal Property | The insured's (and family's) personal belongings, worldwide | 50% of Coverage A |
| D - Loss of Use | Additional living expense + fair rental value while the home is uninhabitable | 30% of Coverage A (HO-3) |
The percentages are the key exam mechanic. If Coverage A is $300,000 on an HO-3:
- Coverage B = 10% = $30,000
- Coverage C = 50% = $150,000
- Coverage D = 30% = $90,000
Coverage B and C limits are additive, meaning they sit on top of Coverage A — they are not carved out of the Coverage A limit. A learner who subtracts B and C from A is making the classic error.
Coverage A and B details
Coverage A - Dwelling covers the residence and structures attached to it (an attached garage, an attached deck). It also covers building materials and supplies located on or next to the residence premises used to construct, alter, or repair the dwelling.
Coverage B - Other Structures covers structures set apart from the dwelling by clear space (or connected only by a fence, utility line, or similar connection). Detached garages, tool sheds, gazebos, and in-ground pools are Coverage B.
- Coverage B excludes structures used for business and structures rented to a non-tenant of the dwelling (with limited exceptions). A detached garage rented out to a stranger as a private garage is excluded from Coverage B.
- The insured can increase Coverage B by endorsement when the 10% default is inadequate.
On an HO-3 with Coverage A of $250,000 and no endorsements changing the defaults, what is the limit for Coverage B - Other Structures?
Coverage C and its special sub-limits
Coverage C - Personal Property insures the belongings of the insured and resident family members anywhere in the world, on a named-peril basis under most forms (open-peril under HO-5). Property usually settles on actual cash value (ACV) unless the insured buys replacement-cost-on-contents endorsement.
The heavily tested feature of Coverage C is its special internal limits — dollar caps on classes of property that are easy to steal or hard to value. These caps apply within the Coverage C limit; they do not add to it. Typical ISO HO 2011/2022 special limits:
| Property class | Special limit |
|---|---|
| Money, coins, bank notes, bullion | $200 |
| Securities, deeds, manuscripts, tickets, stamps | $1,500 |
| Watercraft (incl. trailers, motors, equipment) | $1,500 |
| Trailers/semitrailers not used with watercraft | $1,500 |
| Theft of jewelry, watches, furs, precious stones | $1,500 |
| Theft of firearms and related equipment | $2,500 |
| Theft of silverware, goldware, pewterware | $2,500 |
| Business property on the residence premises | $2,500 |
| Business property away from the residence premises | $1,500 |
| Electronic apparatus used for business (in vehicle) | $1,500 |
The jewelry trap
Note the jewelry limit applies to theft only. If a $6,000 diamond ring is destroyed in a covered fire, the $1,500 theft cap does not apply — the full ring value (subject to overall Coverage C limit and valuation) is payable. But if that ring is stolen, recovery is capped at $1,500 unless the insured scheduled the jewelry on a Personal Articles Floater / scheduled personal property endorsement.
An insured's $5,000 wedding ring is stolen. Coverage C is $150,000 with no scheduling endorsement. How much will the unendorsed HO policy pay for the ring?
Coverage D - Loss of Use
When a covered peril makes the residence uninhabitable, Coverage D pays:
- Additional Living Expense (ALE): the increase in living costs needed to maintain the household's normal standard of living (hotel, restaurant meals above normal grocery cost, laundry). Only the extra cost is paid, not total living cost.
- Fair Rental Value: if part of the home was rented to others, the lost rent (less expenses that do not continue).
- Civil authority prohibiting use of the home because of a neighboring covered loss is paid for a limited period (typically up to 2 weeks).
Additional Coverages
Section I also lists Additional Coverages that provide protection beyond or alongside A-D. Commonly tested ones:
| Additional Coverage | Typical scope |
|---|---|
| Debris Removal | Removal of debris of covered property after a covered loss |
| Reasonable Repairs | Cost of temporary repairs to protect from further damage |
| Trees, Shrubs, Plants | Limited (e.g., 5% of Cov A, max $500 per item) for named perils |
| Fire Department Service Charge | Up to $500, no deductible |
| Property Removed | Covered against direct loss while removed to protect it |
| Credit Card / EFT / Forgery | Up to $500 for unauthorized use, forgery, counterfeit money |
| Collapse | Abrupt collapse from specified causes |
| Landlord's Furnishings | Limited coverage in a rented apartment on premises |
The $500 credit-card/forgery and the $500 fire-department-service amounts are frequent number questions.