Section I Coverages A-D and Additional Coverages
Key Takeaways
- Coverage A is the anchor; B = 10%, C = 50%, D = 30% of Coverage A on owner-occupant forms.
- Coverage C follows the insured worldwide but imposes special sublimits ($200 money, $1,500 jewelry theft, $2,500 firearms theft).
- Coverage D (Loss of Use) pays Additional Living Expense and Fair Rental Value, including limited civil-authority access.
- Additional Coverages (debris removal, trees/shrubs 5%, fire dept $500, loss assessment $1,000) provide separate amounts that do not reduce A-D.
The Four Section I Coverages
Every owner-occupant homeowners form organizes property protection into four lettered coverages. The Coverage A limit, chosen on the Declarations, drives the other limits because B, C, and D are expressed as percentages of Coverage A.
| Coverage | What it insures | Standard relationship to Cov A |
|---|---|---|
| A - Dwelling | The house, attached structures, materials on premises | Limit selected (the anchor) |
| B - Other Structures | Detached garage, shed, fence | 10% of Cov A |
| C - Personal Property | Contents/belongings worldwide | 50% of Cov A (HO-3) |
| D - Loss of Use | Additional living expense + fair rental value | 30% of Cov A (HO-3) |
Note that HO-4 and HO-6 differ: their primary anchor is Coverage C (the percentages above apply to HO-2/3/5 owner forms).
Coverage A and Coverage B Mechanics
Coverage A (Dwelling) covers the residence, structures attached to it (an attached garage), and building materials/supplies on or next to the premises used to build the dwelling. Land is never covered.
Coverage B (Other Structures) covers detached structures separated from the dwelling by clear space, such as a detached garage, tool shed, or gazebo. Standard limit is 10% of Coverage A — but note this is an additional amount in newer ISO forms (it does not reduce Coverage A). Structures used for business or rented to a non-tenant are excluded.
Worked example: A home is insured with Coverage A = $300,000. Standard Coverage B = 10% × $300,000 = $30,000. If a tornado destroys a detached $42,000 garage, the policy pays only $30,000 unless Coverage B was increased by endorsement.
Coverage C and Coverage D Mechanics
Coverage C (Personal Property) is 50% of Coverage A by default and follows the insured worldwide. Property usually at a secondary residence is limited to 10% of Coverage C. Section I imposes special sublimits on theft-prone or high-value categories:
- Money/coins/bullion: $200
- Securities, deeds, manuscripts: $1,500
- Watercraft and trailers: $1,500
- Jewelry/watches/furs (theft): $1,500
- Firearms (theft): $2,500
- Silverware/goldware (theft): $2,500
Coverage D (Loss of Use) is 30% of Cov A (HO-3) and pays Additional Living Expense (extra cost to maintain your normal standard of living elsewhere) and Fair Rental Value if part of the home was rented out. Civil authority prohibiting use is covered up to 2 weeks.
Additional Coverages
Beyond A-D, Section I grants a list of Additional Coverages, most of which provide extra limits or specific perils:
- Debris removal - reasonable cost; if the loss plus removal exceeds the limit, an extra 5% is available.
- Reasonable repairs - emergency measures to protect from further damage.
- Trees, shrubs, plants, lawns - up to 5% of Coverage A, max $500 per item, for named perils (not wind/hail/disease).
- Fire department service charge - up to $500, no deductible.
- Property removed - covered for any peril for 30 days while being moved from endangered premises.
- Credit card / forgery / counterfeit money - up to $500.
- Loss assessment - up to $1,000 for a charge from a property association.
- Collapse, Glass breakage, and Landlord's furnishings also appear.
Trap: These additional coverages do NOT reduce the Coverage A-D limits — they are separate amounts of insurance.
A home is insured with Coverage A of $400,000 on an HO-3. Burglars steal jewelry worth $6,000 and $300 in cash. Coverage C carries no scheduled endorsement. How much will the policy pay for these two items combined?
Under a standard unendorsed HO-3 with Coverage A of $250,000, what is the default limit for Coverage B (Other Structures)?
Default Coverage Relationships and Key Additional Coverages
Homeowners limits derive from Coverage A by fixed percentages — a guaranteed exam item:
| Coverage | Default amount |
|---|---|
| B – Other Structures | 10% of Coverage A |
| C – Personal Property | 50% of Coverage A (often 70% on newer forms) |
| D – Loss of Use (ALE) | 20%–30% of Coverage A depending on form |
Off-premises personal property is covered worldwide but limited to 10% of Coverage C (or $1,000, whichever is greater on some forms). Key special internal limits cap theft/loss of high-risk classes: money ($200), securities/manuscripts ($1,500), jewelry/furs theft ($1,500), firearms theft ($2,500), silverware theft ($2,500), business property on-premises ($2,500).
Additional Coverages include debris removal, reasonable repairs, trees/shrubs/plants (5% of Cov A, $500/item), fire department service charge ($500), collapse, and loss assessment.
Trap: the special limits are caps on loss, not extra coverage. Scheduling (a personal articles floater) is needed to fully insure valuable jewelry.
A homeowner with $300,000 Coverage A suffers a covered loss to a detached garage. What is the default limit available under Coverage B (Other Structures)?
Loss of Use (Coverage D) and Property NOT Covered
Coverage D – Loss of Use has three parts the exam separates: Additional Living Expense (ALE) pays the increase in living costs when the residence is uninhabitable after a covered loss; Fair Rental Value pays lost rent if part of the home was rented; and Civil Authority prohibition pays ALE/rental value (typically up to two weeks) when a civil authority bars access to the home because of a covered peril at a neighboring property.
Section I also lists property not covered: motor vehicles and their equipment (covered by auto), aircraft, property of roomers/boarders not related to the insured, business data, and animals/birds/fish. Land value is never covered.
| Coverage D part | Pays |
|---|---|
| Additional Living Expense | Extra cost to maintain normal standard of living |
| Fair Rental Value | Lost rental income from rented portions |
| Civil Authority | ALE/rent when access is barred (often up to 2 weeks) |
Exam tip: ALE pays only the increase in living costs, not total living costs — if the family would have spent $2,000 anyway and now spends $3,200, ALE pays the $1,200 increase.