Section I Coverages A-D and Additional Coverages

The Four Section I Coverages

Section I of every homeowners form (except HO-4, which has no Coverage A) is organized into four lettered property coverages plus a list of Additional Coverages. Knowing the default limit relationships among A, B, C, and D is high-yield exam material because most are expressed as a percentage of Coverage A.

• Coverage A - Dwelling: the house itself and structures attached to it, plus materials on the premises to repair the dwelling. The Coverage A limit is the foundation number from which B, C, and D are derived.
• Coverage B - Other Structures: detached garages, sheds, fences, in-ground pools. Default limit is 10% of Coverage A and is additive (it does not reduce Coverage A).
• Coverage C - Personal Property: the insured's contents anywhere in the world. Default limit is 50% of Coverage A (raisable; HO-6/HO-4 set their own).
• Coverage D - Loss of Use: additional living expense (ALE) and fair rental value when a covered loss makes the home uninhabitable. Default limit is 30% of Coverage A on HO-3/HO-5; 20% on HO-2/HO-8.

Worked Example: Deriving the Limits

An HO-3 is written with Coverage A = $300,000. Using ISO default percentages:

Because Coverage B is additive, the total property limit available is $300,000 + $30,000 + $150,000 + $90,000 = $570,000, not $300,000. Candidates routinely err by assuming B/C/D are sublimits inside Coverage A. They are separate limits added on top.

Note the HO-6 difference: Coverage C is the primary coverage (set by the insured), and Coverage A defaults to only $5,000.

The percentages are defaults, not caps. An insured can raise Coverage B above 10% (a detached workshop), raise Coverage C above 50% (a heavily furnished home), or raise Coverage D for a high-cost rental market, each by endorsement and additional premium. The exam expects you to apply the default unless the question hands you a higher scheduled amount. Also remember Coverage D pays only the additional living expense above the household's normal cost of living, plus fair rental value on any portion the insured rents to others; it does not reimburse the full hotel bill if the family was already spending money on housing.

Additional Coverages (Section I)

These pay in addition to the main limits unless the form states otherwise. Common tested sublimits:

• Debris Removal - included; if debris + direct loss exceeds the limit, an extra 5% is available.
• Reasonable Repairs, Trees, Shrubs & Plants - typically 5% of Coverage A, with a per-item cap (often $500) and named perils only (fire, lightning, explosion, riot, aircraft, vehicles not owned by an occupant, vandalism, theft).
• Fire Department Service Charge - $500, no deductible.
• Property Removed - 30 days while removed to protect from loss.
• Credit Card / EFT / Forgery / Counterfeit Money - $500 default.
• Loss Assessment - $1,000 for the insured's share of an association assessment.
• Collapse, Glass Breakage, Landlord's Furnishings, Grave Markers, Ordinance or Law (10% of Coverage A).

Coverage C Special Limits (Sub-Sublimits)

Even within Coverage C, certain property categories carry special dollar limits regardless of the overall Coverage C amount. These are a classic exam trap because they apply per occurrence:

• Money, bank notes, coins, bullion: $200
• Securities, deeds, manuscripts, tickets, stamps: $1,500
• Watercraft (incl. trailers/motors): $1,500
• Trailers not used with watercraft: $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; off premises: $500

Note that the jewelry/firearm/silverware limits apply only to theft, not to other perils. To insure a valuable engagement ring fully, the insured uses the Scheduled Personal Property endorsement (HO 04 61).

The Default Coverage Percentages You Must Memorize

ISO Homeowners forms derive Coverages B, C, and D from Coverage A by fixed default percentages. Memorize them because the exam routinely asks you to compute a limit from the dwelling amount.

Worked example: with Coverage A of $300,000, defaults give B = $30,000, C = $150,000, and D = $90,000. These are minimums the insured can usually increase by endorsement. For an HO-4 tenant or HO-6 condo form, Coverage C is the primary (scheduled) amount and Coverages A/B work differently, which is why the form matters before you apply the percentages.

Coverage C Special Limits and Off-Premises Rules

Coverage C carries special internal sublimits that cap recovery on theft-prone or hard-to-value categories regardless of the overall Coverage C limit. Typical figures: about $200 on money and bullion, $1,500 on securities and certain papers, $1,500 on watercraft, $1,500 on jewelry/watches/furs for theft, $2,500 on firearms for theft, and $2,500 on business property on premises. To insure a valuable item above its sublimit, the insured schedules it via the Scheduled Personal Property endorsement, which also broadens to open-peril and removes the deductible.

Coverage C also follows the insured away from home: worldwide personal property is covered, but off-premises property is limited to the greater of 10% of Coverage C or $1,000. A worked trap: a thief takes a $900 coin collection and a $3,000 wedding ring. The coins fall under the roughly $200 money/bullion-related limits (collectible coins are typically treated under the money/numismatic sublimit), and the unscheduled ring recovery is capped at the $1,500 jewelry theft sublimit — not the full $3,000 — unless the ring was scheduled.