Dwelling Property Coverages

Dwelling policies divide coverage into distinct sections, each protecting different aspects of the property. Understanding what each coverage includes — and excludes — is essential for proper protection.

Coverage A: Dwelling

What It Covers:

The dwelling coverage protects the main residential structure at the described location, including:

• The house or building itself
• Attached structures (attached garage, deck, porch)
• Built-in appliances (HVAC, water heater, built-in dishwasher)
• Fixtures and installations (cabinets, flooring, plumbing)
• Permanently installed outdoor equipment (central AC units)
• Materials and supplies for construction or repair (on premises)

What It Does NOT Cover:

• Land value (never insured)
• Detached structures (covered under B)
• Personal property of tenants (tenant's responsibility)

Dwelling Valuation

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Coverage B: Other Structures

What It Covers:

Structures separated from the dwelling by clear space, including:

• Detached garages
• Storage sheds
• Fences and walls
• Gazebos and pergolas
• Detached workshops
• Swimming pools (structure, not equipment)

Standard Limit

10% of Coverage A (can be increased by endorsement)

Example:

• Coverage A: $300,000
• Coverage B: $30,000 automatically included

What It Does NOT Cover:

• Structures used for business purposes
• Structures rented to non-residents
• Land value under the structure

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Coverage C: Personal Property

Important: Coverage C is OPTIONAL on dwelling policies.

What It Covers (When Purchased):

Property owned by the named insured at the described location:

• Landlord's appliances (refrigerator, stove, washer/dryer)
• Maintenance equipment (lawn mowers, tools)
• Furnishings in furnished rentals
• Landlord's personal items stored on premises

Tenant Property

Critical Point: Coverage C does NOT cover tenant property. Tenants must purchase their own renter's insurance (HO-4).

Sublimits Apply

Even when Coverage C is purchased, special limits apply:

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Coverage D: Fair Rental Value

What It Covers:

Loss of rental income when a covered peril makes the property uninhabitable.

How It Works:

1. Covered loss makes property unrentable
2. Insurer pays fair market rental value
3. Continues until property is repaired or policy period ends
4. Less any expenses that don't continue (like utilities)

Standard Limit

• DP-1, DP-2: 10% of Coverage A
• DP-3: Up to 20% of Coverage A

Example:

• Coverage A: $200,000
• Fair Rental Value limit: $20,000-$40,000
• Monthly rent: $2,000
• Covered fire makes property uninhabitable for 6 months
• Claim: $12,000 (6 months × $2,000)

Key Points

• Only pays for time reasonably required to repair
• Deducts any expenses that stop (like maintenance)
• Does NOT pay if tenant just leaves voluntarily
• Covered peril must cause the uninhabitability

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Coverage E: Additional Living Expense

Important: This coverage is primarily for owner-occupied dwelling situations.

What It Covers:

Extra costs the owner incurs to live elsewhere while the dwelling is uninhabitable due to a covered loss.

Covered Expenses:

• Temporary housing (hotel, rental)
• Increased food costs (restaurant meals over home cooking)
• Additional transportation costs
• Storage of belongings

When It Applies

Coverage E is available when:

• The insured occupies the dwelling (owner-occupant)
• A covered loss makes the dwelling uninhabitable
• Extra expenses are reasonable and necessary

For Landlords: Fair Rental Value (Coverage D) is more applicable than ALE.

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Coverage Limits Summary

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Example: Complete Dwelling Policy

Property: Rental home Coverage A: $300,000