4.2 Section I Coverages A-D and Additional Coverages

The Four Section I Coverages

Section I property protection is built around four lettered coverages. On owner forms, the Coverage A limit is chosen first and the others default to percentages of it.

• Coverage A - Dwelling: the house and attached structures.
• Coverage B - Other Structures: detached structures (garage, shed, fence).
• Coverage C - Personal Property: the insured's belongings.
• Coverage D - Loss of Use: extra living costs when the home is uninhabitable.

Standard Coverage Relationships

Worked example: with Coverage A at $300,000, Coverage B = $30,000, Coverage C = $150,000, Coverage D = $90,000. These default percentages can be increased by endorsement.

Coverage C: On- and Off-Premises

Coverage C insures household goods anywhere in the world. Property normally kept at a residence other than the insured location is limited to 10% of Coverage C (subject to a minimum, commonly $1,000).

Certain property is excluded from Coverage C entirely - for example, animals, motor vehicles licensed for road use, and aircraft. These exclusions are frequent exam distractors.

Coverage C Special Limits (Sublimits)

Theft-prone or hard-to-value classes carry per-occurrence special limits. Representative HO 2011 figures:

Trap: the jewelry sublimit applies only to theft. A $6,000 ring destroyed by a covered fire is paid up to the full Coverage C limit. To insure high-value jewelry against theft above $1,500, the insured schedules it (Scheduled Personal Property endorsement), which lists each item with an agreed value and broadens perils to open peril including mysterious disappearance.

A second set of special limits caps loss by any peril on certain property: business property kept on the residence (about $2,500), business property away from the premises (about $1,500), and electronic apparatus in a vehicle. Do not confuse the theft-only sublimits with these any-peril caps - the exam tests both.

Coverage D - Loss of Use

Coverage D pays the consequential cost of a covered Section I loss that makes the home unfit to live in:

• Additional Living Expense (ALE): the increase in living costs (hotel, meals, laundry) needed to maintain the household's normal standard of living.
• Fair Rental Value: lost rent if part of the home was rented out.
• Civil authority: ALE/fair rental for up to two weeks when a neighboring covered loss forces evacuation.

Coverage D reimburses only the extra expense, not the family's ordinary spending.

Coverage A and B Details

Coverage A insures the dwelling, attached structures (an attached garage), and materials/supplies on or next to the premises used to build, alter, or repair it. Building items not yet installed are covered if they are intended for the dwelling.

Coverage B - Other Structures insures detached garages, sheds, fences, and gazebos. A trap: a detached structure used for business or rented to others (other than as a private garage) is excluded or restricted under Coverage B. Land itself is never covered - only the structures on it.

Additional Coverages

Section I also grants a list of Additional Coverages, usually within or above the main limits:

• Debris removal - up to 5% additional if the main limit is exhausted by the loss plus the removal cost.
• Reasonable repairs the insured makes to protect property from further damage after a covered loss.
• Trees, shrubs, plants, lawns - 5% of Coverage A in total, capped (often $500) per item, and only for named perils such as fire, lightning, vandalism, or vehicles not owned by an occupant.
• Fire department service charge - up to $500, no deductible applies.
• Credit card, electronic fund transfer, forgery, counterfeit money - up to $500, no deductible.
• Property removed - covered against any peril for up to 30 days while being moved to protect it.
• Collapse, loss assessment, landlord's furnishings, and glass or safety glazing in the applicable forms.

These coverages frequently appear in exam math because some are in addition to the policy limit (debris removal, fire department charge) while others share it.

How the four property coverages relate as percentages

The Section I coverages are linked to Coverage A by standard percentages on the HO-3, and the exam tests the multipliers. Coverage B (Other Structures) is 10% of A; Coverage C (Personal Property) is commonly 50% of A (raisable to 70%+); and Coverage D (Loss of Use) is commonly 30% of A on the HO-3. So a dwelling insured at $400,000 carries roughly $40,000 other structures, $200,000 personal property, and $120,000 loss of use by default. Knowing these relationships lets you answer "how much coverage applies to the detached garage" without additional facts.

Coverage C special limits and the off-premises rule

Coverage C carries special internal sublimits that cap recovery for theft of certain categories - for example about $1,500 on jewelry/watches/furs (theft), $2,500 on business property on premises, $200 on money, and $1,500 on securities. Exceed these and the insured needs a Scheduled Personal Property endorsement (HO 04 61). Coverage C also follows the insured off-premises worldwide but typically at a reduced 10% of the Coverage C limit (or a minimum dollar amount). A scenario where a $12,000 ring is stolen pays only the $1,500 jewelry special limit unless it was scheduled - the single most common Coverage C trap.