4.2 Section I Coverages A-D and Additional Coverages
Key Takeaways
- Section I has four base coverages: A Dwelling, B Other Structures, C Personal Property, D Loss of Use.
- Coverage B defaults to 10% of Coverage A; Coverage C defaults to 50% of Coverage A on owner forms.
- Coverage D (Loss of Use) pays Additional Living Expense and Fair Rental Value while the home is uninhabitable.
- Special limits cap loss to high-theft categories like jewelry, firearms, silverware, and cash.
- Additional coverages (debris removal, trees/shrubs, credit card, etc.) sit on top of or inside the base limits depending on the item.
The four base coverages
Section I of a homeowners policy is built around four lettered coverages. On owner-occupied forms, Coverage A (Dwelling) is the anchor limit, and the others are set as percentages of A.
| Coverage | Insures | Default limit |
|---|---|---|
| A - Dwelling | The house and attached structures | Stated amount |
| B - Other Structures | Detached garages, sheds, fences | 10% of A |
| C - Personal Property | Contents/belongings | 50% of A |
| D - Loss of Use | Living expenses while uninhabitable | 30% of A (HO-3) |
These percentages are defaults; the insured can buy higher limits. Coverage B is additive on most owner forms, not a sublimit carved out of A.
Coverage A and Coverage B detail
Coverage A insures the dwelling on the residence premises plus structures attached to it (an attached garage) and materials on or next to the premises used to build or repair the dwelling. Land value is excluded.
Coverage B insures other structures set apart from the dwelling by clear space, such as a detached garage, tool shed, or fence. A structure connected only by a fence or utility line still counts as "other structures." Coverage B excludes structures used for business or rented to a non-tenant of the dwelling. Exam trap: a detached garage rented out for storage to a stranger loses Coverage B.
Coverage C and special limits
Coverage C (Personal Property) covers belongings owned or used by the insured, anywhere in the world, on a named-peril basis (open-peril on HO-5). Property usually at another residence is limited to 10% of Coverage C or $1,000, whichever is greater.
Certain categories carry special limits of liability — a sublimit inside Coverage C that applies regardless of the cause (some apply to theft only):
| Category | Typical special limit |
|---|---|
| Money, coins, bullion | $200 |
| Securities, deeds, manuscripts | $1,500 |
| Watercraft and trailers | $1,500 |
| Jewelry, watches, furs (theft) | $1,500 |
| Firearms (theft) | $2,500 |
| Silverware/goldware (theft) | $2,500 |
| Business property on premises | $2,500 |
A homeowner's HO-3 has Coverage A of $300,000. A burglar steals $4,000 of jewelry. With no scheduling endorsement, how much will the policy pay for the jewelry before the deductible?
Coverage D - Loss of Use
Coverage D responds when a covered Section I loss makes the residence uninhabitable. It has two parts:
- Additional Living Expense (ALE) — pays the increase in living costs (hotel, restaurant meals beyond normal) so the household can keep its standard of living.
- Fair Rental Value — if part of the home was rented to others, pays the lost rent (less expenses that do not continue) while it is unrentable.
A third trigger, Civil Authority, pays ALE/Fair Rental Value for up to two weeks when a civil authority bars access because a neighboring premises suffered a covered peril. Coverage D has no coinsurance and runs for the reasonable time needed to repair or relocate.
Additional coverages
The policy lists about a dozen additional coverages that extend or add to the base limits, including:
- Debris removal — included, with extra 5% if the base limit is exhausted.
- Reasonable repairs, trees/shrubs/plants (5% of A, max $500 per item, limited perils).
- Fire department service charge — $500, no deductible.
- Property removed from a peril — 30 days at any location.
- Credit card/forgery — $500 default.
- Loss assessment — $1,000 for charges levied by an association.
- Collapse, glass breakage, and landlord's furnishings.
Worked example: a windstorm destroys a fence (Coverage B) and the cleanup costs $2,000. If Coverage B is exhausted, debris removal adds up to 5% of the Coverage B limit to help cover the haul-away.
Worked limits example
The percentage relationships are a favorite exam item. Suppose an HO-3 carries Coverage A of $250,000. Apply the defaults:
| Coverage | Calculation | Default limit |
|---|---|---|
| B - Other Structures | 10% of $250,000 | $25,000 |
| C - Personal Property | 50% of $250,000 | $125,000 |
| D - Loss of Use | 30% of $250,000 | $75,000 |
If a detached garage worth $30,000 is destroyed, Coverage B pays only its $25,000 limit unless the insured had increased it. Raising Coverage A also raises B, C, and D proportionally unless the schedule states a separate dollar amount, which is why underinsuring the dwelling cascades into thin contents and loss-of-use limits.
Property not covered and exclusions within Coverage C
Coverage C is broad but deliberately excludes property better insured elsewhere:
- Animals, birds, and fish (a pet death is not a contents loss);
- Motor vehicles and their equipment (insure under an auto policy), except those used to service the residence such as a riding mower;
- Aircraft and parts;
- Property of roomers or boarders not related to the insured;
- Property in an apartment regularly rented to others (use the landlord's furnishings additional coverage instead);
- Property held as samples or for sale by others.
Exam trap: a stolen car stereo is an auto-policy loss, not a Coverage C theft, even though it was "personal property."