3.2 Dwelling Coverages A-E and Other Coverages
Key Takeaways
- Coverages: A=Dwelling, B=Other Structures, C=Personal Property, D=Fair Rental Value, E=Additional Living Expense.
- DP-2/DP-3: Coverage B is 10% of A as ADDITIONAL insurance; D+E together are 20% of A.
- DP-1: Coverage B (10%) and D+E (10%) come OUT OF the Coverage A limit, not in addition.
- Trees, shrubs, and plants are limited (5% of A, per-item cap) and NOT covered for windstorm or hail.
- Fire Department Service Charge ($500) and Property Removed (5 days, any peril) apply with no separate limit selection.
The Five Dwelling Coverages
The Dwelling program organizes property coverage into five lettered coverages. Knowing the letters, what each insures, and the automatic additional-amount rules is essential exam material.
| Coverage | Insures | Typical Default Additional Limit |
|---|---|---|
| A — Dwelling | The residence + attached structures + building materials on premises | Base limit chosen by insured |
| B — Other Structures | Detached garage, shed, fence (separated by clear space) | 10% of Coverage A (additional, not subtractive on DP-2/DP-3) |
| C — Personal Property | Contents usual to a dwelling | Chosen; commonly low or zero on rentals |
| D — Fair Rental Value | Lost rent when premises unfit | 20% of Coverage A (DP-2/DP-3) |
| E — Additional Living Expense | Extra costs for the insured to live elsewhere | Combined with D within the 20% on DP-2/DP-3 |
Trap: On the DP-1, Coverages D and E are limited to 10% of Coverage A combined, and that 10% is part of (not in addition to) the Coverage A limit. On DP-2 and DP-3, the percentage rises to 20% and is additional.
Coverage A and Coverage B Mechanics
Coverage A is the centerpiece. The 80% coinsurance and replacement-cost provisions key off the Coverage A limit. Coverage B (Other Structures) is automatically provided at 10% of Coverage A on DP-2/DP-3 as an additional amount of insurance — meaning a fully insured dwelling with $300,000 Coverage A carries $30,000 for detached structures without reducing the dwelling limit.
On DP-1, by contrast, the 10% Coverage B amount is carved out of the Coverage A limit, so using Coverage B reduces what remains for the dwelling. Structures used for business or rented to a non-tenant are excluded from Coverage B.
Coverage D and E: Loss of Use
Coverage D — Fair Rental Value reimburses the landlord/owner for rent lost when a covered peril makes the rented portion uninhabitable, less expenses that do not continue. Coverage E — Additional Living Expense pays the extra cost for the owner-occupant to maintain their normal standard of living elsewhere.
Worked example: A DP-3 home with $250,000 Coverage A carries a combined D+E limit of 20% × $250,000 = $50,000. If a kitchen fire forces the owner to a rental apartment at $2,400/month while their normal carrying cost was $1,500/month, the ALE pays the $900/month difference (extra expense only) until repairs are complete, capped at the $50,000 pool.
Other Coverages
The Dwelling forms add several Other Coverages that do not require a separate limit selection:
- Other Structures (the Coverage B grant described above).
- Debris Removal — included within the limit; an additional 5% is available if the limit is exhausted.
- Improvements, Alterations and Additions — for tenants, up to 10% of Coverage C.
- Reasonable Repairs, Property Removed (covered for 5 days against any peril while removed to protect from loss), Trees/Shrubs/Plants (5% of Coverage A, capped per item — commonly $500), Fire Department Service Charge ($500, no deductible), and Collapse (on broad/special forms).
Trap: Trees, shrubs, and plants are NOT covered for windstorm or hail on the dwelling forms — only for named perils like fire, lightning, explosion, riot, aircraft, vehicles (non-owned), and vandalism.
Dwelling Coverages A through E in Detail
| Coverage | What it insures | Typical limit relationship |
|---|---|---|
| A - Dwelling | The residence structure and attached structures | The base limit; sets the others |
| B - Other Structures | Detached garages, sheds, fences | Often 10% of Coverage A as additional insurance |
| C - Personal Property | Household contents of the insured | Chosen amount; can be excluded for landlords |
| D - Fair Rental Value | Lost rental income when the dwelling is uninhabitable | Often a percentage of A (e.g., 20%) |
| E - Additional Living Expense | Extra costs for the insured to live elsewhere | Added on DP-2/DP-3 |
A landlord insuring a rental house typically buys A, B, and D and drops or minimizes Coverage C, because the tenant owns the contents (the tenant buys a separate DP tenant or renters policy for Coverage C).
Other Coverages
The dwelling forms include additional coverages such as debris removal, reasonable repairs, property removed (5 days), trees/shrubs/plants (limited), and worldwide property (on broader forms).
Exam trap: Coverage B (Other Structures) is typically provided as an additional amount equal to 10% of Coverage A - it does not reduce the dwelling limit. Coverage C on the dwelling policy is NOT automatically replacement cost unless endorsed, and the "off-premises" personal property limit is restricted. Liability (Coverage L) and medical payments (Coverage M) are not built in and require the Personal Liability Supplement.
Loss Settlement Nuances Across the Forms
How each dwelling coverage settles depends on the form. On DP-1, the dwelling and other structures settle at ACV. On DP-2 and DP-3, the building settles at replacement cost when the insured carries at least 80% of replacement value, mirroring homeowners coinsurance. Coverage C personal property settles at ACV on all dwelling forms unless a replacement-cost endorsement is added.
Exam tip: Remember the building-vs-contents split: DP-2/DP-3 give replacement cost on the structure, but personal property stays ACV absent an endorsement. The Fair Rental Value (D) and Additional Living Expense (E) coverages pay only for the period reasonably required to repair or replace - not an open-ended benefit - and ALE applies only when the insured actually occupied the dwelling. For landlord risks, Coverage D (lost rent) matters far more than Coverage E.
A DP-3 dwelling has Coverage A of $400,000 written to full value. A detached garage is destroyed by a covered peril; rebuilding costs $46,000. Assuming no other Coverage B losses, how much can the policy pay for the garage?
A DP-3 owner-occupant with $250,000 Coverage A is displaced by a covered fire. Their normal monthly housing cost is $1,600; a temporary rental costs $2,500/month. Under Coverage E (ALE), what monthly amount does the policy reimburse, and what is the combined D+E cap?