4.2 Section I Coverages (A–D)

Coverage A — Dwelling

Coverage A insures the dwelling on the residence premises plus structures attached to it (garage, deck, breezeway), materials and supplies on or next to the premises for construction/repair, and building fixtures and built-in appliances (furnace, central air, built-in dishwasher). It does not cover land, the value of the site, or growing plants, trees, and shrubs — those fall under a separate Additional Coverage. The Coverage A limit drives every other percentage on the policy, so under-insuring A cascades into low B/C/D limits.

Coverage B — Other Structures

Coverage B insures detached structures separated from the dwelling by clear space or connected only by a fence/utility line — a detached garage, storage shed, gazebo, or guest house. The default is 10% of Coverage A and it is additional insurance (it does not reduce the Coverage A limit). Excluded from B: structures rented to others (except as a private garage), structures used for business, and land. On a $400,000 dwelling, default Coverage B is $40,000.

Coverage C — Personal Property

Coverage C insures the insured's personal property anywhere in the world (worldwide coverage), defaulting to 50% of Coverage A. The insured may raise or lower this percentage. Property of guests and residence employees can be covered at the insured's option while on the residence premises.

Special Sub-Limits (Unendorsed HO-3)

Critical exam distinctions:

• The jewelry/watches/furs $1,500 cap and the firearms/silverware $2,500 caps apply only to theft. If those items burn in a covered fire, they are paid up to the full Coverage C limit.
• Money is capped at $200 for any cause (theft, fire, anything) — there is no fire exception.
• To get full value and open-perils/mysterious-disappearance protection on high-value items, schedule them (HO 04 65).

Property NOT Covered Under Coverage C

• Motor vehicles and their equipment (except items not designed for road use, like a riding mower)
• Animals, birds, and fish; aircraft and hovercraft
• Property of roomers/boarders not related to an insured
• Property in an apartment regularly rented to others (use Landlord's Furnishings endorsement)
• Credit/debit cards (covered separately as an Additional Coverage, default $500)

Coverage D — Loss of Use

Coverage D defaults to 30% of Coverage A on the HO-3 and pays three things:

1. Additional Living Expense (ALE) — the increase in living costs (hotel, restaurant meals above normal grocery cost) while the home is uninhabitable from a covered loss.
2. Fair Rental Value — lost rent (less non-continuing expenses) on any portion the insured rented to others.
3. Civil Authority — ALE/fair rental for up to two weeks when a civil authority bars use of the residence because of a covered peril at a neighboring location.

Loss of Use is paid for the shortest time reasonably required to repair/replace or for the household to permanently relocate — it is not bounded by the policy expiration date.

Section I Additional Coverages

Beyond A–D, the HO form grants a list of Additional Coverages, several with their own small limits the exam tests:

The Special Limits Apply Per Occurrence, Not Per Item

A frequent trap: the personal-property special limits (jewelry theft $1,500, firearms theft $2,500, money $200) are aggregate caps for the loss, not per-article amounts. Two stolen rings and a stolen necklace share the single $1,500 jewelry-theft limit. To restore full value on a specific article, the insured schedules it on HO 04 65. Also remember the limits only cap the listed property class — unscheduled clothing, furniture, and electronics are paid up to the full Coverage C limit because no special sub-limit applies to them.