3.2 Dwelling Coverages A-E and Other Coverages
Key Takeaways
- Coverage A = dwelling (no land); Coverage B = other structures at 10% of A as additional insurance.
- Coverage C (personal property) is optional and insures only the named insured, never the tenant.
- Coverage D (Fair Rental Value) and E (Additional Living Expense) share a combined limit of 20% of A on DP-2/DP-3.
- Other Coverages include Debris Removal, Property Removed (5 days, any cause), and a $500 Fire Department Service Charge with no deductible.
- Loss of use on DP-2/DP-3 runs for the shortest time to repair or replace, not a fixed period.
The Five Coverage Letters
The dwelling forms organize property coverage under five lettered limits. Memorize both the label and the automatic percentage relationship to Coverage A.
| Coverage | Name | Automatic Limit Basis |
|---|---|---|
| A | Dwelling | Stated limit (policy face) |
| B | Other Structures | 10% of Coverage A |
| C | Personal Property | Optional; chosen limit |
| D | Fair Rental Value | 20% of Coverage A (DP-2/DP-3) |
| E | Additional Living Expense | Combined with D |
Note the difference from Homeowners: on the dwelling form, Coverage D (Fair Rental Value) and Coverage E (Additional Living Expense) share a combined limit equal to 20% of Coverage A on the DP-2 and DP-3 (10% on the DP-1).
Coverage A, B, and the Other-Structures Math
Coverage A (Dwelling) insures the described residential structure, attached structures, materials on or next to the premises for construction, and building equipment. It does not cover land.
Coverage B (Other Structures) covers detached garages, fences, and sheds, with an automatic limit of 10% of Coverage A. On the DP, this 10% is an additional amount of insurance — it does not reduce Coverage A.
Worked example: a DP-3 carries $300,000 Coverage A. Automatic Coverage B = 10% x $300,000 = $30,000, available on top of the dwelling limit. A detached garage destroyed by a covered peril is paid up to $30,000 without eroding the $300,000.
Coverage C and the Loss-of-Use Coverages
Coverage C (Personal Property) is optional and insures the named insured's household contents — never the tenant's property. If a landlord writes a DP without Coverage C, a tenant's stolen electronics are simply not covered by the landlord's policy. The tenant needs a separate tenant/HO-4 policy.
Coverage D (Fair Rental Value) reimburses the landlord for lost rent — the fair rental value of the part of the dwelling rented out — while it is uninhabitable from a covered loss, minus expenses that do not continue.
Coverage E (Additional Living Expense) pays the owner-occupant's increased cost of living elsewhere during repairs. On the dwelling form, D and E are payable for the shortest time required to repair or replace, with no fixed-period cap on the DP-2/DP-3 (the DP-1 limits the period). A key distinction: Fair Rental Value reimburses lost rental income when a tenant-occupied portion is uninhabitable, while Additional Living Expense reimburses the owner's own extra costs. The same loss can trigger both if a duplex is partly rented and partly owner-occupied.
Worked example: Coverage A is $250,000 on a DP-3. Combined D+E = 20% x $250,000 = $50,000 available for lost rent and/or living expense, payable only while the dwelling is genuinely uninhabitable and only for expenses that actually increase.
Other Coverages (Additional Coverages)
The forms grant several Other Coverages within or in addition to the limits:
- Debris Removal — included; an extra 5% is available if the limit plus removal cost exceeds the Coverage A limit.
- Reasonable Repairs, Property Removed (covered for any cause for 5 days while removed to protect it), Trees, Shrubs and Other Plants (limited percentage with a per-item cap).
- Fire Department Service Charge — typically $500, no deductible applied.
- Collapse (DP-2/DP-3 only).
- Lawns, Trees, Shrubs and Plants — DP-2/DP-3 grant up to 5% of Coverage A, with a $500 per-item cap, for named perils only (fire, lightning, explosion, riot, aircraft, vehicles not owned by an occupant, vandalism, theft) — never windstorm.
Reading a Coverage Schedule on the Exam
Exam stems frequently hand you only the Coverage A limit and expect you to derive the rest. Build the habit of writing the percentages down the page:
| Derived limit | DP-3 formula | If A = $200,000 |
|---|---|---|
| Coverage B | 10% of A | $20,000 |
| Coverage D + E (combined) | 20% of A | $40,000 |
| Trees/shrubs/plants | 5% of A, $500/item | $10,000 cap |
| Debris removal extra | +5% of limit | available if needed |
Remember the DP-1 cuts the loss-of-use (D+E) percentage to 10% of Coverage A and limits the time period, while DP-2/DP-3 use 20% with no fixed cap. Mixing up the 10% (other structures) and 20% (loss of use) figures is the most common arithmetic error on dwelling questions.
On a DP-3 with $300,000 of Coverage A, what is the automatic Coverage B (Other Structures) limit, and does it reduce Coverage A?
A tenant's electronics are stolen from a house insured under the landlord's DP-3 with no Coverage C. Whose property, if anyone's, does the landlord's policy cover?
The Dwelling Coverage Letters and What Each Pays
The dwelling forms organize property coverage by letter. Coverage A (Dwelling) insures the residence and attached structures plus materials on or near the premises for construction. Coverage B (Other Structures) insures detached garages, sheds, and fences, typically with a default limit but with the right to increase. Coverage C (Personal Property) covers the insured's belongings on a named-peril basis. Coverage D (Fair Rental Value) and Coverage E (Additional Living Expense) address the time-element loss when the dwelling becomes uninhabitable. Knowing which letter responds is the foundation for dwelling questions.
Fair Rental Value vs. Additional Living Expense
These two time-element coverages are easy to confuse and frequently tested together. Fair Rental Value (Coverage D) reimburses the landlord for lost rental income, less non-continuing expenses, when a covered loss makes a rented portion of the dwelling uninhabitable; it protects an owner who rents the property to others. Additional Living Expense (Coverage E in the dwelling forms) pays the necessary increase in living costs the owner-occupant incurs to maintain a normal standard of living elsewhere while the home is repaired. The decisive question is whether the displaced party is a landlord (D) or an occupant (E).
Other Coverages and Sublimits
Dwelling forms add Other Coverages such as Other Structures (if pulled from Coverage A), debris removal, reasonable repairs to protect property, trees/shrubs/plants (with a per-item and aggregate sublimit and a limited peril list), fire department service charge, and property removed from premises endangered by a covered peril. These extensions usually carry their own caps and conditions, and the exam likes to test the small sublimits (such as the modest tree and shrub limit) because candidates assume full coverage where a sublimit quietly applies.
How the Letters Interact in a Loss
In a real loss the letters work together: a fire that destroys a rented duplex triggers Coverage A for the structure, Coverage B for the detached garage, and Coverage D for the rents the landlord loses while rebuilding, with debris removal paid as an Other Coverage. If the same building were owner-occupied, Coverage E would replace Coverage D for the owner's additional living expenses. Because dwelling Coverage C is named-peril and often optional on landlord policies, a landlord who furnishes appliances must confirm Coverage C is in force. Tracing each loss element to the correct coverage letter is exactly the analysis the exam rewards.