Section I Coverages A-D and Additional Coverages

The Four Property Coverages

Section I of every homeowners form is organized into four lettered coverages. The exam expects you to know what each insures, how the limits relate to one another, and which are percentage-derived from Coverage A.

The percentages differ by form (HO-5 raises Coverage C to 50% open-peril; HO-8 lowers Coverage C to 50% named-peril; HO-4 has no Coverage A so its B/C/D are scheduled differently). The HO-3 percentages above are the ones tested by default.

Coverage B and Coverage C Worked Numerics

Coverage B example. A home is insured for Coverage A = $300,000. Other Structures (Coverage B) is automatically 10%, so the detached garage and shed share a $30,000 limit in addition to the dwelling limit — it is not subtracted from Coverage A.

Coverage C example. With Coverage A = $300,000, Coverage C on an HO-3 is 50% = $150,000. If the insured needs more (a collector), the limit can be increased by endorsement. Note Coverage C follows the insured worldwide (anywhere in the world), but property usually at a secondary residence is sublimited to 10% of Coverage C or $1,000, whichever is greater.

Coverage D example. Loss of Use is 30% of Coverage A = $90,000. If a covered fire makes the home uninhabitable for three months while the family rents an apartment, the extra rent, restaurant meals above normal, and laundromat costs are paid as Additional Living Expense (ALE) until the home is repaired or the family permanently relocates — capped at the $90,000 limit.

Special Limits of Liability on Coverage C

Coverage C carries internal sublimits for categories prone to theft or hard to value. These are tested verbatim. The sublimits apply per occurrence and do not increase the overall Coverage C limit.

• $200 — money, bank notes, coins, gold/silver other than goldware/silverware
• $1,500 — securities, accounts, deeds, manuscripts, tickets, stamps
• $1,500 — watercraft including trailers and equipment
• $1,500 — trailers not used with watercraft
• $1,500 — theft of jewelry, watches, furs, precious stones (a theft-only sublimit)
• $2,500 — theft of firearms and related equipment
• $2,500 — theft of silverware, goldware, pewterware
• $2,500 — property on premises used for business

Trap: a $9,000 diamond ring stolen in a burglary pays only $1,500 unless scheduled on an HO 04 61 endorsement or Personal Articles Floater. But if that same ring is destroyed in a covered fire, the jewelry sublimit does not apply (it is theft-only) — the loss is paid up to the full Coverage C limit.

Additional Coverages

Beyond A-D, Section I grants Additional Coverages that often pay over and above the policy limits. Frequently tested ones:

• Debris removal — usually within the applicable limit, but an extra 5% if debris plus the loss exceed the limit
• Reasonable repairs to protect property from further damage
• Trees, shrubs, plants, lawns — up to 5% of Coverage A, with a $500 per-item cap; perils are limited (fire, lightning, vandalism, theft, etc.) — not wind or ice
• Fire department service charge — up to $500, no deductible
• Property removed from premises endangered by a peril — covered 30 days at any location
• Credit card, fund transfer, forgery, counterfeit money — up to $500
• Loss assessment — up to $1,000 for charges by an HOA/condo association
• Collapse, glass breakage, and landlord's furnishings (HO-6) round out the list

Trap: the $500 trees-and-shrubs cap is per item, and the perils list excludes wind — so a tree blown over in a storm is not covered under this additional coverage, though it may be covered if it damages a covered structure.

The Four Section I Coverages and Their Limit Relationships

Section I of a Homeowners policy uses four lettered coverages whose default percentage relationships the exam tests. Coverage A - Dwelling insures the residence and attached structures and sets the anchor limit. Coverage B - Other Structures insures detached structures (a freestanding garage, fence, or shed) at a default of 10 percent of Coverage A as an additional amount.

Coverage C - Personal Property insures contents at a default of 50 percent of Coverage A (adjustable up or down), and covers property worldwide. Coverage D - Loss of Use pays additional living expense and fair rental value at a default of 20 to 30 percent of Coverage A depending on the form, when a covered peril makes the home uninhabitable.

Coverage C carries special limits of liability that cap recovery for theft-prone or high-value classes regardless of the overall contents limit: low caps on money and bullion, securities and deeds, jewelry and furs (theft), firearms (theft), silverware (theft), and business property. These are sublimits within Coverage C, not additional amounts, and the cure for a valuable item is a scheduled personal property endorsement or a Personal Articles Floater.

Certain property is excluded or limited from Coverage C entirely: animals, motor vehicles (other than those used to service the residence), aircraft, and property of roomers not related to the insured. Recognizing what Coverage C does not cover, and which sublimit applies to a given item, is the most frequent contents question.

Worked scenario: a burglar steals $8,000 of jewelry and a $2,000 television from a home with a $300,000 Coverage A and thus a $150,000 Coverage C limit. The television is paid in full subject to the deductible, but the jewelry is capped at the special theft sublimit (commonly $1,500) unless scheduled, so the insured recovers only that sublimit for the jewelry. Applying the correct special limit rather than the full Coverage C amount is the core Section I contents skill.

Key Takeaways

Section I uses Coverage A (dwelling), B (other structures, default 10 percent of A), C (personal property, default 50 percent of A, worldwide), and D (loss of use, roughly 20 to 30 percent of A). Coverage C carries special theft and value sublimits on jewelry, furs, firearms, silverware, money, and securities, curable by scheduling; and it excludes animals, vehicles, and aircraft. Additional coverages such as debris removal and trees/shrubs have their own caps and peril limits.