3.2 Dwelling Coverages A-E and Other Coverages
Key Takeaways
- Coverage A is the dwelling, Coverage B other structures (10% of A, additive), Coverage C personal property, Coverage D fair rental value, and Coverage E additional living expense.
- On dwelling forms Coverage D (Fair Rental Value) and Coverage E (Additional Living Expense) together are capped at a stated percentage of Coverage A — commonly 20% on DP-3.
- Coverage C on a dwelling form defaults to ACV and is optional; the insured can decline contents coverage entirely on a rental dwelling.
- Other Coverages add sublimits such as Debris Removal, Reasonable Repairs, Trees/Shrubs/Plants, and Property Removal that the exam tests by percentage and dollar cap.
- Coverage B is additional insurance — paying a Coverage B loss does not reduce the Coverage A limit available for the dwelling.
The Five Dwelling Coverages
The dwelling forms organize limits into lettered coverages. Coverage A is the anchor; several other coverages are expressed as a percentage of it.
| Coverage | Insures | Default Relationship to A |
|---|---|---|
| A — Dwelling | The main building and attached structures | Stated limit (the anchor) |
| B — Other Structures | Detached garage, shed, fence | 10% of A, additive |
| C — Personal Property | Contents, furniture, appliances | Optional; insured selects a limit |
| D — Fair Rental Value | Lost rent if the dwelling is untenantable | Percentage of A (often 20% on DP-3) |
| E — Additional Living Expense | Extra cost to live elsewhere | Shares the D/E percentage of A |
Note the structural difference from Homeowners: on a dwelling form, Coverage C is optional and often declined on a pure rental, and Coverage D is labeled Fair Rental Value rather than "Loss of Use."
Coverage B Is Additional Insurance
A frequent exam point: on the dwelling forms, Coverage B (Other Structures) at 10% of A is additional insurance. A loss to a detached garage does not erode the Coverage A limit. Worked example: Coverage A is $250,000, so Coverage B provides $25,000 (10%). A fire destroys a $20,000 detached garage and also damages the dwelling for $180,000. The insurer pays $20,000 under B and the full $180,000 under A — the garage payment does not reduce the $250,000 available for the dwelling.
The insured may increase the Coverage B limit for additional premium when 10% is inadequate.
A dwelling policy shows Coverage A of $300,000. Other Structures is at the standard percentage and is additional insurance. A detached workshop worth $40,000 is destroyed. How much does the policy pay for the workshop, before deductible?
Coverage D and E Sublimits
Fair Rental Value (D) reimburses the landlord's lost rent, less any expenses that do not continue, when a covered peril makes the dwelling unfit to rent. Additional Living Expense (E) reimburses the owner-occupant's increased cost of living elsewhere. On DP-3 the combined D and E limit is commonly 20% of Coverage A. Both are payable only for the shortest time required to repair or replace the damaged premises, or for the household to permanently relocate.
Worked example: Coverage A is $250,000; the D/E sublimit is 20% = $50,000. A fire forces a six-month displacement. Lost rent is $1,800/month ($10,800) and ALE for the owner's other unit is $1,200/month ($7,200). Total $18,000 is well within the $50,000 cap and is paid in full.
Other Coverages (Sublimits)
Beyond A–E, the forms add Other Coverages with their own caps the exam quantifies:
- Debris Removal — included within the limit; if debris plus the direct loss exceeds the limit, an additional 5% is available.
- Reasonable Repairs — emergency repairs to protect property from further damage.
- Property Removed — covered against direct loss from any cause for up to 30 days while removed to protect it from a covered peril.
- Fire Department Service Charge — typically $500, with no deductible applied.
Trees, Shrubs, and Plants — A Classic Trap
The Trees, Shrubs, and Plants Other Coverage pays up to 5% of Coverage A, with a per-item cap (commonly $500). The crucial restriction is the limited peril list: fire or lightning, explosion, riot or civil commotion, aircraft, vandalism, theft, and vehicles not owned by an occupant of the dwelling.
Notice what is missing: windstorm and hail are not covered perils for plantings, and neither is a vehicle owned by the insured. A tree blown down by a storm or struck by the insured's own car generates no recovery, no matter how large the 5% pool. Exam writers reliably build a question around a wind-toppled tree to test whether you memorized the peril list rather than the dollar caps.
A windstorm topples a $900 ornamental tree in the yard of a DP-3 dwelling. The insured expects payment under the Trees, Shrubs, and Plants coverage. What is the correct outcome?
Personal Property Special Limits and Settlement
When Coverage C is purchased, the dwelling forms apply special limits of liability to theft-prone or high-value categories the same way Homeowners does — for example, low sublimits on money, securities, jewelry, watercraft, and firearms. These are caps within Coverage C, not additional amounts.
Unless a replacement-cost-on-contents endorsement is added, Coverage C settles on Actual Cash Value. A five-year-old sofa with a $1,000 replacement cost and 50% depreciation pays $500. Off-premises personal property is covered at a reduced amount — typically 10% of Coverage C — recognizing that contents away from the insured location face different exposures. Candidates should distinguish these contents rules from the building's coinsurance, which does not apply to Coverage C.
The Five Dwelling Coverages and Their Default Percentages
The Dwelling Policy organizes coverage into lettered parts whose default relationships the exam tests. Coverage A - Dwelling insures the residence and attached structures and is the anchor limit. Coverage B - Other Structures insures detached structures (a garage, fence, or shed) and is provided automatically at 10 percent of Coverage A as an additional amount on the DP forms (unlike Homeowners, where it is part of the policy structure).
Coverage C - Personal Property is optional on dwelling forms and is selected as a separate limit. Coverage D - Fair Rental Value pays the lost rent a landlord cannot collect while the dwelling is untenantable after a covered loss, and Coverage E - Additional Living Expense pays an owner-occupant's increased cost of living elsewhere.
A defining dwelling-program feature is that Coverage D and E together are usually capped at 20 percent of Coverage A (often split, with limits varying by form), and they apply only when a covered peril causes the dwelling to become uninhabitable. A landlord typically cares about Coverage D (lost rent), while an owner-occupant cares about Coverage E (additional living expense). Distinguishing fair rental value from additional living expense by who occupies the dwelling is a recurring question.
Unlike Homeowners, the dwelling forms do not bundle liability; Coverage L (Personal Liability) and Coverage M (Medical Payments) must be added by endorsement when wanted. This separation lets a landlord buy property coverage only, or add liability tailored to a rental exposure.
Worked scenario: a fire makes a rented duplex uninhabitable for three months. The landlord recovers lost rent under Coverage D - Fair Rental Value up to the policy limit, not additional living expense, because the landlord does not live there. Had the owner occupied the unit, Coverage E would instead pay the extra cost of temporary housing. Routing the loss to the correct coverage by occupancy is the core dwelling-coverages skill.
Key Takeaways
Dwelling coverage is lettered A (dwelling), B (other structures, automatically 10 percent of A), C (optional personal property), D (fair rental value for landlords), and E (additional living expense for owner-occupants), with D and E commonly capped together near 20 percent of Coverage A. Loss of use applies only after a covered peril makes the dwelling uninhabitable. Liability (L) and medical payments (M) are not automatic and must be endorsed onto the dwelling form.