Section I Coverages A-D and Additional Coverages

Section I: the four property coverages

Section I of every Homeowners form is organized into four lettered coverages. The exam tests both what each one covers and the automatic percentage relationships ISO builds between them.

• Coverage A - Dwelling: the main residence structure plus attached structures (attached garage, built-ins). The Coverage A limit is the foundation of the whole policy.
• Coverage B - Other Structures: detached structures - detached garage, fence, shed, gazebo. Automatically set at 10% of Coverage A as additional insurance (does not reduce A).
• Coverage C - Personal Property: contents owned by the insured and resident family. Set at 50% of Coverage A (often adjustable 40%-70%). Worldwide coverage applies.
• Coverage D - Loss of Use: additional living expense (ALE) and fair rental value when a covered loss makes the home uninhabitable. Set at 30% of Coverage A in the HO-3 (20% in HO-4/HO-6).

Worked example: deriving sublimits from Coverage A

If an HO-3 is written with Coverage A = $300,000, the standard automatic limits are:

A classic exam question gives you Coverage A and asks for one of the derived limits, or vice versa. If the test says a detached shed worth $35,000 is destroyed and Coverage A is $300,000, only $30,000 (the 10% Coverage B limit) is available - the remaining $5,000 is uninsured unless Coverage B was increased by endorsement.

Coverage C special limits and Additional Coverages

Coverage C carries special internal sublimits on theft-prone or high-value categories regardless of total Coverage C. Memorize these representative ISO figures:

Additional Coverages sit on top of A-D and include: Debris Removal, Reasonable Repairs, Trees/Shrubs/Plants (5% of Cov A, max $500 per item), Fire Department Service Charge ($500), Credit Card/Forgery ($500), Loss Assessment ($1,000), and Collapse. These do not erode the main coverage limits unless the form states otherwise.

Coverage D, Coverage B exposures, and property NOT covered

Coverage D - Loss of Use has two parts the exam separates carefully. Additional Living Expense (ALE) reimburses the necessary increase in living costs (hotel, meals above normal, laundry) so the household can maintain its normal standard of living while the home is repaired. Fair Rental Value applies when the insured rents part of the home to others - it pays the lost rent, less expenses that do not continue, for the time the rented portion is uninhabitable. Coverage D also pays for prohibited use when a civil authority bars access because a neighboring premises was damaged by a covered peril, typically limited to two weeks.

Certain property is specifically excluded from Section I even on open-peril forms. The exam tests these as "NOT covered as personal property": motor vehicles and their equipment (licensed for road use), aircraft, animals/birds/fish, property of roomers/tenants who are not relatives, and business data on articles separately insured. A motorized golf cart or lawn tractor used to service the residence is an exception and may be covered. Property held as samples or for sale in a home business is limited to the $2,500 business-property sublimit.

The Section I Coverage Letters

Homeowners property coverage uses the same A-D scheme as dwelling but with richer built-in percentages:

Coverage C Special Limits

Coverage C carries special limits of liability (sublimits) on theft-prone or easily-overstated categories - money ($200-$300), securities, jewelry/watches/furs by theft ($1,500-$2,500), firearms by theft, silverware by theft, and business property on-premises. These sublimits do not add to Coverage C; they cap the recoverable amount inside it. Scheduling the property on a Scheduled Personal Property endorsement (HO 04 61) removes the sublimit and provides open-peril, agreed-value coverage.

Additional Coverages

Section I includes a long list of Additional Coverages, several of which are additional amounts of insurance:

• Debris removal (within the limit, with a small extra allowance)
• Reasonable repairs to protect property
• Trees, shrubs, plants (named perils, percentage cap, per-tree dollar cap)
• Fire department service charge (often $500, no deductible)
• Property removed (covered 30 days while moved from a threatened loss)
• Credit card / forgery / counterfeit money (often $500)
• Loss assessment (charges levied by a condo/HOA, capped)
• Collapse and landlord's furnishings

Off-Premises and Worldwide Coverage

Coverage C follows the insured's property worldwide, but property usually located at another residence (a second home) is capped at 10% of Coverage C or $1,000, whichever is greater. Knowing that contents are insured off-premises - and the 10% other-residence cap - is a steady source of exam points.