4.2 Section I Coverages A-D and Additional Coverages

The Four Section I Coverages

Section I property coverage is organized into four lettered coverages plus a list of additional coverages. The dollar limits flow from a single number: Coverage A, the dwelling limit. Coverages B, C, and D are written as PERCENTAGES of Coverage A on most owner forms.

Note: percentages differ by form. On the HO-4 and HO-6, the program leads with Coverage C and Coverage D defaults to 30% (HO-6) or 30% (HO-4) of Coverage C. Always read the declarations — these percentages are minimums the insured can increase.

Coverage C Details and Worked Numerics

Coverage C (personal property) follows the insured worldwide; property usually at another residence is limited to 10% of Coverage C or $1,000, whichever is greater.

Worked example — other-residence limit: A home has Coverage A of $300,000, so Coverage C on an HO-3 is 50% = $150,000. Personal property at the insured's vacation cabin is limited to the greater of 10% of $150,000 ($15,000) or $1,000 = $15,000.

Coverage C is settled on an actual cash value basis by default unless a Personal Property Replacement Cost endorsement is added. Certain classes carry special sublimits (theft or dollar caps), summarized below.

Special Coverage C Sublimits (2011/2022 ISO)

Trap: the jewelry sublimit ($1,500) applies only to loss by theft — fire damage to jewelry is paid up to the full Coverage C limit. To insure high-value jewelry against all perils at agreed value, schedule it on a Scheduled Personal Property endorsement (inland marine floater).

Coverage D and the Additional Coverages

Coverage D — Loss of Use has two parts: (1) Additional Living Expense — extra costs to maintain the household's normal standard of living when the residence is uninhabitable after a covered loss; and (2) Fair Rental Value — lost rent if part of the home was rented out. It also pays if a civil authority prohibits use of the residence (limited to two weeks).

Key Additional Coverages every candidate should know:

• Debris removal — included; extra 5% available if the limit is exhausted.
• Reasonable repairs — to protect from further damage.
• Trees, shrubs, plants — 5% of Coverage A, max $500 per item, named perils only (not wind/hail).
• Fire department service charge — $500, no deductible.
• Credit card / EFT / forgery — $500.
• Loss assessment — $1,000 (condo/HOA assessments).
• Ordinance or law — 10% of Coverage A to meet building codes during repair.

Loss of Use Mechanics and the Ordinance-or-Law Allowance

Coverage D - Loss of Use has no deductible and pays the increase in living cost, not the whole new cost - if rent at a temporary apartment is $2,000 but the family's normal housing cost was $1,400, ALE pays the $600 difference. Fair rental value likewise pays lost rent less expenses that do not continue. Civil-authority loss of use is limited (commonly two weeks).

The built-in ordinance-or-law additional coverage (10% of Coverage A) is frequently inadequate for older homes; the HO 04 77 endorsement raises it. Debris removal is included within the limit, with an extra 5% if the limit is exhausted.

Trap: ALE pays the additional cost of maintaining the normal standard of living, not the total temporary-housing bill. Candidates who pay the full new rent overstate the claim.

Scheduling Up From the Special Limits

The Coverage C special limits ($1,500 jewelry theft, $2,500 firearms theft, $200 money) are easy to exceed. Two fixes: raise the blanket sublimit by endorsement, or schedule high-value items on the Scheduled Personal Property endorsement (HO 04 61), which insures each listed item on an open-peril, agreed-value, no-deductible basis - broader perils and a higher limit than the base form.

Trap: The jewelry sublimit applies only to loss by theft - a fire that destroys jewelry pays up to the full Coverage C limit. Scheduling both raises the limit and broadens the perils (e.g., mysterious disappearance), which the unendorsed policy excludes.