3.2 Dwelling Coverages A-E and Other Coverages

The Five Dwelling Coverages

The dwelling forms organize property protection into lettered coverages. Coverages A and B are always present; C, D, and E are optional or conditional depending on how the policy is written.

Coverage A — Dwelling

Coverage A insures the residential structure shown on the declarations, structures attached to it (attached garage, deck, porch), built-in appliances and fixtures (furnace, central air, water heater, cabinets, flooring), and building materials and supplies located on or next to the premises used to build or repair the dwelling. Land is never covered — even after a covered loss the insurer pays only to rebuild, not to restore the soil or excavation.

Watch the trap: outdoor equipment and detached items belong under Coverage B, not A. Equipment used to service the premises — such as a furnace stored for installation — can fall under Coverage A as long as it has not yet been installed and is on the residence premises.

Coverage B — Other Structures and the 10% Rule

Coverage B insures detached structures: a separate garage, tool shed, gazebo, or fence. The standard form provides an automatic amount equal to 10% of the Coverage A limit, and this 10% is additional insurance — it does not erode Coverage A. Because the limit is tied to Coverage A, raising Coverage A automatically raises the Coverage B pool as well.

Worked example. A DP-3 carries Coverage A of $300,000. A detached garage is destroyed.

• Automatic Coverage B = 10% × $300,000 = $30,000
• If the garage costs $42,000 to rebuild, the insurer pays the $30,000 limit and the insured absorbs the $12,000 shortfall.

To close that gap the insured buys additional Coverage B by endorsement. Structures rented to others or used for business may be excluded under Coverage B.

Coverages C, D, and E

Coverage C — Personal Property is optional and, when added, written for a specific dollar amount (not a percentage of A). It follows the broad named-perils standard. Off-premises contents are typically covered at 10% of the Coverage C limit, subject to a stated dollar floor.

Coverage D — Fair Rental Value reimburses the landlord for lost rent when a covered loss makes the premises untenantable, limited to the shortest time required to repair.

Coverage E — Additional Living Expense (ALE) pays the increase in living costs for an owner-occupant forced to live elsewhere. Coverages D and E together are commonly limited to 20% of Coverage A on the dwelling forms.

The practical split is occupancy-driven: a landlord uses Coverage D because rent stops, while an owner-occupant uses Coverage E because their own living costs rise.

Other Coverages (Additional Coverages)

The dwelling forms add a list of Other Coverages that apply on top of the main limits, including:

• Debris Removal — cost to clear debris after a covered loss.
• Reasonable Repairs — temporary measures to protect property from further damage.
• Property Removed — covered against direct loss from any cause for up to 5 days while being moved to protect it from a covered peril.
• Trees, Shrubs, and Other Plants — limited to named perils (NOT wind/hail), capped at 5% of Coverage A, with a per-item dollar cap.
• Fire Department Service Charge — typically $500 for a liability the insured assumed; no deductible applies.

How the 20% D-and-E Cap Works in Practice

The combined Coverage D and E limit is an additional amount of insurance equal to 20% of Coverage A on the dwelling forms — it does not reduce the dwelling limit. Suppose Coverage A is $300,000:

• Available D + E = 20% × $300,000 = $60,000.
• A landlord whose rental burns and is untenantable for six months at $2,000/month rent recovers $12,000 of lost rent under Coverage D, well within the $60,000 pool.
• The clock runs only for the shortest time required to repair or replace, not the time the insured actually takes — a key adjuster control against padded claims.

Reading the Declarations Page

Most dwelling exam questions can be answered by reading the declarations. The dec page lists the named insured, the described location, the policy period, each coverage limit (A through E as written), the deductible, the form and edition (e.g., DP 00 03 09 14), and any attached endorsements by number.

A candidate should be able to look at a dec page and answer three things instantly: which form (and therefore which peril and settlement basis) applies, what the Coverage A limit is (because B, D, and E often derive from it), and whether Coverage C or liability has been added — because if they are not listed, they are not covered.