Section I Coverages A-D and Additional Coverages
Key Takeaways
- Section I uses four coverages: A (Dwelling), B (Other Structures), C (Personal Property), and D (Loss of Use).
- Coverage B defaults to 10% of Coverage A, and Coverage C defaults to 50% of A on owner forms (D is typically 30% of A on HO-3).
- Special internal sub-limits cap categories such as money ($200), securities ($1,500), and theft of jewelry ($1,500).
- Additional Coverages (debris removal, trees/shrubs, fire department service charge, etc.) provide extra limits beyond A-D.
The Four Section I Coverages
Section I of every owner Homeowners form is divided into four parts, lettered A through D. The dollar limit you choose for Coverage A drives the default limits for the other three through fixed percentages.
- Coverage A - Dwelling: the house itself plus structures attached to it (an attached garage) and materials/supplies on the premises used to build the dwelling.
- Coverage B - Other Structures: detached structures such as a separate garage, shed, or fence.
- Coverage C - Personal Property: the contents owned or used by an insured, anywhere in the world.
- Coverage D - Loss of Use: additional living expense and fair rental value when a covered loss makes the home uninhabitable.
Default Percentage Relationships (HO-3)
| Coverage | What it insures | Default limit |
|---|---|---|
| A - Dwelling | The house | Chosen by insured |
| B - Other Structures | Detached structures | 10% of A |
| C - Personal Property | Contents | 50% of A |
| D - Loss of Use | ALE / fair rental | 30% of A |
Worked example. A home insured for Coverage A = $300,000 on an HO-3 carries default limits of:
- Coverage B = 10% x $300,000 = $30,000
- Coverage C = 50% x $300,000 = $150,000
- Coverage D = 30% x $300,000 = $90,000
Coverages B, C, and D are additive to Coverage A. So a total loss could pay well beyond the $300,000 dwelling limit. Note that on the HO-4 tenant form and HO-6 condo form, Coverage C is the primary limit chosen by the insured, and Coverage D defaults differently (often 30% of C on HO-4, 50% of C on HO-6).
Special Sub-Limits Inside Coverage C
Coverage C contains internal special limits that cap certain property categories regardless of the overall Coverage C amount. These are heavily tested. Common ISO defaults:
| Category | Special limit |
|---|---|
| Money, bank notes, coins | $200 |
| Securities, deeds, manuscripts | $1,500 |
| Watercraft (incl. trailers/equipment) | $1,500 |
| Theft of jewelry, watches, furs | $1,500 |
| Theft of firearms | $2,500 |
| Theft of silverware/goldware | $2,500 |
| Business property on premises | $2,500 |
Key trap: the jewelry limit of $1,500 applies only to theft. Loss of jewelry by a covered peril such as fire is paid up to the full Coverage C limit. To raise theft coverage on valuables, the insured schedules them via the Scheduled Personal Property endorsement (HO 04 61).
Additional Coverages
Beyond A-D, Section I grants a list of Additional Coverages, each with its own (usually small) limit. Frequently tested ones:
- Debris removal - covered, with an extra 5% available if the debris plus loss exceeds the limit.
- Reasonable repairs - temporary repairs to protect property from further damage.
- Trees, shrubs, plants, lawns - up to 5% of Coverage A, with a $500 cap per item; perils are limited (fire, lightning, vandalism, theft, etc., but not wind or disease).
- Fire department service charge - up to $500, no deductible applies.
- Property removed - covered against direct loss from any cause while being removed from endangered premises, for up to 30 days.
- Credit card / forgery - up to $500 for unauthorized use and forgery.
- Loss assessment - up to $1,000 for assessments charged by an association.
The Four Section I Coverages
Homeowners Section I property coverages follow a fixed lettered scheme tied to one another by percentage relationships:
| Coverage | What It Insures | Typical Relationship |
|---|---|---|
| A - Dwelling | The house and attached structures | The base limit the owner selects |
| B - Other Structures | Detached garage, shed, fence | Usually 10% of Coverage A |
| C - Personal Property | Contents/belongings | Usually 50% of Coverage A (adjustable) |
| D - Loss of Use | Additional living expense / fair rental | Often 30% of Coverage A (HO-3) |
Because B, C, and D are derived from A, setting Coverage A too low silently underinsures everything else - a favorite exam point.
Personal Property Sublimits (Special Limits)
Coverage C carries internal special limits that cap recovery for theft-prone or high-value categories regardless of the overall Coverage C limit. Commonly tested figures include money/coins, securities, watercraft, trailers, jewelry/watches/furs (theft), firearms (theft), and silverware (theft). To restore full value, the insured schedules the item by endorsement (scheduled personal property / personal articles floater), which removes the sublimit and usually broadens to open perils with no deductible.
A question describing a stolen $9,000 engagement ring on an unendorsed HO policy tests the jewelry theft sublimit, not the Coverage C limit.
Additional Coverages and the Off-Premises Extension
Section I also grants additional coverages such as debris removal, reasonable repairs, trees/shrubs/plants (a percentage of Coverage A with a per-item cap), fire department service charge, property removed from danger, credit card/forgery, and collapse. Personal property is also covered worldwide - belongings stolen from a hotel room while traveling are covered - though property usually located at another residence may be sublimited. Understanding that contents follow the insured off-premises, while the special theft limits still apply, resolves many travel-loss scenarios.
An HO-3 is written with Coverage A = $250,000 and no changes to default limits. The insured suffers a covered total loss. What is the default Coverage C (personal property) limit?
An insured's wedding ring (worth $6,000) is stolen during a burglary. The HO-3 has a $150,000 Coverage C limit and no scheduled property endorsement. How much will the policy pay for the ring?