HOMEOWNERS POLICIES · 5 MIN READ
Section I Coverages A Through D and Their Defaults
Section I of the homeowners policy is built around four property coverages that all key off a single anchor: Coverage A (Dwelling). Coverage A insures the residence structure itself plus attached structures, and its limit drives nearly every other default limit in the policy. Coverage B (Other Structures) covers detached structures on the residence premises — detached garages, sheds, fences, gazebos — used for non-business purposes. Coverage C (Personal Property) covers the insured's contents worldwide, and Coverage D (Loss of Use) pays additional living expenses and fair rental value when a covered loss makes the home unfit to live in. The default limits are expressed as percentages of Coverage A. On the HO-3, Coverage B defaults to 10% of Coverage A and is ADDITIONAL insurance — a total dwelling loss does not exhaust Coverage B. Coverage C defaults to 50% of Coverage A on owner-occupied forms, and Coverage D provides a percentage-based limit for additional living expense. Because the percentages are automatic, an insured with $400,000 of Coverage A automatically carries $40,000 of Coverage B with no separate premium entry. When default percentages are inadequate — say a large barn or guest cottage — endorsement HO 04 12 schedules a higher Coverage B limit as a stand-alone amount. Section II adds two more letters: Coverage E (Personal Liability) with a standard default limit, and Coverage F (Medical Payments to Others) at a small per-person default. Exams love math questions that apply the percentages to a stated Coverage A, so practice converting the anchor limit into each default sublimit quickly.
Watch it instead: Section I Defaults: Everything Keys Off A6:24 interactive video · pauses twice to check youKey rules
Coverage A is the anchor: other Section I limits default as percentages of it
The dwelling limit on the declarations drives Coverage B, C, and D defaults automatically. Change Coverage A and the percentage-based limits move with it.
Why the exam cares: Exam math questions give you Coverage A and ask for a companion limit; recognizing the anchor relationship is the whole skill.
Coverage B defaults to 10% of Coverage A as additional insurance
Detached, non-business structures are covered up to 10% of the dwelling limit, in addition to Coverage A rather than carved out of it. HO 04 12 increases the limit when detached structures are substantial.
Why the exam cares: Testers ask both the percentage and whether the limit is additional insurance — a total dwelling loss leaving Coverage B intact is a favorite scenario.
Coverage C covers personal property worldwide, subject to special limits
Contents are covered on and away from the residence premises, but certain categories carry dollar sublimits and business property away from premises is tightly capped.
Why the exam cares: Questions test the worldwide scope and then pivot to the special limits, so know both the general rule and its carve-outs.
Coverage D pays additional living expense and fair rental value after a covered loss
When a Peril Insured Against makes the residence uninhabitable, Coverage D pays the increase in living costs to maintain the household's normal standard of living, plus lost rental value of any rented portion.
Why the exam cares: The exam tests that Coverage D requires a covered loss and pays only the INCREASE in expenses, not all living costs.
Coverage E is per-occurrence liability; Coverage F is per-person medical payments
Coverage E defends and indemnifies the insured for bodily injury and property damage claims with a standard $100,000 default, while Coverage F pays small no-fault medical bills for non-residents at a $1,000 per-person default.
Why the exam cares: Distractors swap per-occurrence and per-person bases; the exam expects you to attach the right basis to each letter.
Numbers to memorize
- 10% of Coverage A — default Coverage B Other Structures limit, provided as additional insurance
- 50% of Coverage A — default Coverage C Personal Property limit on owner-occupied forms
- $40,000 — Coverage B default on a $400,000 Coverage A policy (10% worked example)
- $100,000 — standard default Coverage E Personal Liability limit
- $1,000 per person — standard default Coverage F Medical Payments to Others limit
Common traps
- Confusing Coverage B as part of Coverage A — remember Coverage B is ADDITIONAL insurance equal to 10% of Coverage A, so a total dwelling loss does not reduce it.
- Confusing structures by attachment — remember an attached garage is Coverage A while a detached garage is Coverage B; attachment, not use, is the first test.
- Confusing Coverage D with paying all living costs — remember it pays only the increase over normal expenses while the home is unfit to live in after a covered loss.
- Confusing Coverage E and Coverage F bases — remember liability applies per occurrence while medical payments applies per person, and Coverage F pays without regard to fault.
When a question states a Coverage A limit, immediately jot the 10% and 50% companion figures in the margin before reading the answer choices.
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