4.2 Section I Coverages A-D and Additional Coverages

The Four Section I Coverages

Section I of the homeowners policy contains four property coverages identified by letter. On owner-occupant forms most limits are derived from Coverage A, so you can calculate the others once you know the dwelling amount.

• Coverage A - Dwelling: the house itself, attached structures (attached garage, deck), and building materials on site.
• Coverage B - Other Structures: detached structures such as a separate garage, fence, or storage shed.
• Coverage C - Personal Property: the insured's belongings.
• Coverage D - Loss of Use: extra living costs when the home is uninhabitable.

The Percentage Relationships

On the owner forms (HO-2, HO-3, HO-5), the secondary coverages default to percentages of Coverage A:

Worked example: A home is insured with Coverage A = $300,000. Then Coverage B = $30,000 (10%), Coverage C = $150,000 (50%), and Coverage D = $90,000 (30%). These are additional limits, not carved out of Coverage A.

Coverage C Special Features

Coverage C - Personal Property follows the insured worldwide, so a stolen camera on vacation is covered. Key sub-rules:

• Off-premises limit: personal property usually at another residence is limited to 10% of Coverage C (or $1,000, whichever is greater).
• Special limits of liability cap certain easily-stolen classes: for example $200 on money, $1,500 on jewelry/watches/furs for theft, and $2,500 on business property on premises.

These special limits are per occurrence, not per item, and are commonly tested.

Coverage D - Loss of Use

Loss of Use pays when a covered Section I loss makes the residence uninhabitable. It has two parts:

• Additional Living Expense (ALE): the necessary increase in living costs (hotel, meals) so the household can maintain its normal standard of living.
• Fair Rental Value: lost rental income, less expenses that do not continue, if part of the home was rented.

Coverage D also pays civil authority prohibition of use for up to two weeks when a neighboring covered peril forces evacuation.

Additional Coverages

Beyond Coverages A-D, the policy grants small Additional Coverages, including:

• Debris removal of covered property after a loss.
• Reasonable repairs to protect property from further damage.
• Trees, shrubs, and plants - up to 5% of Coverage A, with a per-item cap (often $500) and only for named perils such as fire, not wind.
• Credit card, forgery, and counterfeit money - typically $500.
• Collapse and landlord's furnishings.

These sit on top of the main limits and rarely require a separate premium.

Special Limits of Liability — Memorize the Theft-Sensitive Classes

Coverage C caps certain easily-stolen or high-value property classes. These special limits apply to the category total per occurrence, not per item, and several apply only to theft:

To insure above these caps the insured uses the Scheduled Personal Property (HO 04 61) endorsement (a "personal articles floater"), which lists each item, often with no deductible and agreed value — and adds open-peril, worldwide coverage including mysterious disappearance.

Property Not Covered and the Coverage A/C Boundary

Coverage C excludes articles separately described and insured elsewhere, animals/birds/fish, motor vehicles (other than those used to service the residence, like a riding mower), aircraft, and property of roomers/boarders not related to the insured.

Exam trap — built-in vs. movable: wall-to-wall carpet, built-in appliances, and central air are Coverage A (dwelling); a window air conditioner, area rug, and refrigerator are Coverage C (personal property). A worked Coverage D point: if a covered fire forces the family into a hotel, Additional Living Expense pays only the increase over normal living costs — if normal monthly food/housing was $2,000 and displacement costs run $3,200, ALE pays the $1,200 difference, not the full $3,200.

Coverage B and Loss-of-Use Drills

Coverage B - Other Structures automatically provides 10% of Coverage A as an additional amount for detached structures (detached garage, shed, fence, in-ground pool). It excludes structures used for business or rented to a non-tenant, except a private garage. A detached structure rented to a tenant for residential use can be covered.

Worked Coverage B example: Coverage A = $400,000, so Coverage B = $40,000. A detached garage worth $55,000 is destroyed by fire. The insurer pays only $40,000 (the 10% sublimit) unless the insured had increased Coverage B by endorsement — a frequent under-insurance trap.

Additional Coverages Worth Memorizing

Exam trap — trees and wind: a windstorm topples the insured's prized maple. The trees/shrubs additional coverage covers trees only for fire, lightning, vandalism, theft, aircraft, vehicles (non-owned), and riot — NOT wind or ice, so the falling tree's own loss is uncovered, though damage it causes to the dwelling is covered as windstorm. Knowing that landscaping is named-peril and that wind/ice/disease are excluded for the plants themselves is a classic discriminator. Loss assessment ($1,000) covers a condo/HOA charge levied against the unit owner for a covered loss to common property — distinct from Coverage A.