4.2 Section I Coverages A-D and Additional Coverages

4.2 Section I Coverages A-D and Additional Coverages

Section I of every homeowners form organizes property into four lettered coverages. The exam tests both what each letter covers and the standard percentage relationships ISO builds between them. Coverage A (Dwelling) is the anchor: the insured chooses the Cov A limit, and the other limits are expressed as percentages of Coverage A by default.

• Coverage A — Dwelling: the residence and structures attached to it (attached garage, built-in appliances).
• Coverage B — Other Structures: detached structures (detached garage, fence, shed). Default limit is 10% of Coverage A, and on most forms this is additional insurance, not a sub-limit carved out of A.
• Coverage C — Personal Property: household contents. Default limit is 50% of Coverage A (HO-2/HO-3); the insured may increase it.
• Coverage D — Loss of Use: additional living expense (ALE) and fair rental value. Default is 30% of Coverage A on the HO-3 (was 20% under older HO 2000 forms — know the current figure).

Standard Cov A Percentages (ISO HO-3)

Worked example. A homeowner buys Coverage A = $300,000 on an HO-3 and does not adjust the defaults.

• Coverage B = 10% × $300,000 = $30,000
• Coverage C = 50% × $300,000 = $150,000
• Coverage D = 30% × $300,000 = $90,000

The exam will hand you a Cov A number and a percentage and expect the multiplication instantly. Note that Cov C off-premises is typically limited to 10% of the Cov C limit (here $15,000) — a frequent distractor.

Coverage C Special Sub-Limits (Memorize These)

Coverage C insures contents broadly, but ISO caps theft-prone and high-value categories with special limits of liability. These are per-occurrence caps, not deductibles, and they apply even though total Cov C is far higher.

Note the theft trigger: jewelry destroyed by a covered fire is paid up to the full Cov C limit, but jewelry stolen is capped at $1,500. To raise these, the insured uses scheduled personal property (a personal articles floater / endorsement HO 04 61).

Additional Coverages

Most HO forms grant a list of Additional Coverages that pay above the lettered limits or carve out specific exposures. The most tested:

• Debris Removal — usually included within the limit, with an extra 5% if the limit is exhausted.
• Reasonable Repairs / Property Removed.
• Trees, Shrubs, Plants, Lawns — typically 5% of Cov A, capped at $500 per item, only for listed perils (fire, lightning, vandalism, theft — NOT wind/ice).
• Fire Department Service Charge — $500 (no deductible).
• Credit Card / EFT / Forgery / Counterfeit Money — base $500, increasable.
• Loss Assessment — base $1,000 for charges levied by an HOA against the unit owner.
• Collapse, Glass, Landlord's Furnishings, Ordinance or Law (base 10% of Cov A for the building, increasable).

The Coverage A Percentages You Must Know

Under the ISO HO-3, the internal limits key off Coverage A:

• Coverage B Other Structures — 10% of A (additional amount).
• Coverage C Personal Property — 50% of A (adjustable; world-wide, with on-premises and off-premises rules).
• Coverage D Loss of Use — 30% of A.

These are defaults the insured can raise. Off-premises personal property is usually limited to 10% of Coverage C (minimum stated dollar amount), which is the classic "items in a storage unit" question.

Coverage C Special Sub-Limits and Additional Coverages

Coverage C carries special internal sublimits that the exam tests verbatim: money/coins (about $200), securities/manuscripts (about $1,500), jewelry/watches/furs theft (about $1,500), silverware theft (about $2,500), firearms theft (about $2,500), and business property on-premises (about $2,500). These are per-loss caps, not deductibles, and theft sublimits are the most heavily tested.

Key additional coverages include debris removal, reasonable repairs, trees/shrubs/plants (5% of A, $500 per item, named perils only — not wind/ice for most plants), fire department service charge ($500), credit card/forgery ($500), and collapse. Many are additional amounts that do not erode the Coverage A limit.

Loss of Use and Off-Premises Property

Coverage D – Loss of Use (30% of A) pays Additional Living Expense (the increase in living costs while the home is uninhabitable) and Fair Rental Value (lost rent on a portion rented to others), plus civil-authority access prohibition for up to two weeks.

Recovery lasts only the shortest time to repair or for the household to relocate. Off-premises personal property is limited to 10% of Coverage C (or a minimum dollar amount), which is the storage-unit question, and property usually kept at a secondary residence has its own sublimit. These percentages are tested as exact figures, so commit them to memory.