Status of Wall-to-Wall Carpet,
Drapes, and Lighting Fixtures—Archived Article

April, 2002

Dwelling or Contents?

Summary: There are a number of items common to daily living that cause difficulty to insurers and their customers because it is not certain whether damage to such items should be covered by insurance on the dwelling or by that on dwelling contents. Wall-to-wall carpeting, and, to a lesser extent, draperies or curtains, and lighting fixtures continue to be a particularly active subject of discussion and argument. (Area rugs are always considered personal property.) This discussion focuses on policy language and interpretation in both the Insurance Services Office (ISO) and American Association of Insurance Services (AAIS) homeowners forms, and concludes with court determinations of coverage issues. Although some of the cases cited were decided years ago, all have been verified as being valid case law.

Aspects of Coverage

Often there is no question about a loss itself being covered. Few insureds care which insurance company pays a loss, or to which policy or line of coverage a company may charge it, as long as full payment is made. But there are at least five aspects of the question “is carpeting dwelling or contents?” that can, and often do, give rise to serious arguments:

1.     Insurance on one item—most often the dwelling—covers the peril that caused the damage, while named perils insurance on the other item does not. For example, if the sun's rays coming through a window scorch both a floor and a sofa, there is no exclusion on the open perils HO 00 03 10 00 for damage to the floor (part of the dwelling); however, scorch is not a named peril for contents coverage. (This example is a good selling point for open perils dwelling and contents coverage, as with the ISO HO 00 05 10 00, introduced with the 2000 homeowners program, or the AAIS form 5.)

2.     Although the peril that caused the loss is the same for both items, the amount of insurance under one item is exhausted by payment of loss to that property, as when a fire completely destroys a dwelling and contents, and contents coverage is exhausted.

3.     The insured has purchased coverage on one item, but not the other—for example, a fire policy on a dwelling only.

4.     Coverage for a building is for replacement cost while coverage for contents is on an actual cash value. (Note that most homeowners policies specifically exclude carpeting from the building replacement cost provision. Attaching homeowners personal property replacement cost endorsements ISO HO 04 90 10 00 or AAIS ML-55 extends replacement cost coverage to carpeting—whether covered as building or personal property.)

5.     As in the Balch case considered later in this discussion, there are separate insurers on the two items and the question is which insurer should pay the loss.

As can be seen from the above, in some cases it is advantageous for the insured to treat carpeting or draperies as part of the building; in others, as contents. The lack of resolution in the policy language is therefore open to argument, especially where the question is confronted only after a loss has occurred.

This premium content is locked for FC&S Coverage Interpretation Subscribers

Enjoy unlimited access to the trusted solution for successful interpretation and analyses of complex insurance policies.

  • Quality content from industry experts with over 60 years insurance experience, combined
  • Customizable alerts of changes in relevant policies and trends
  • Search and navigate Q&As to find answers to your specific questions
  • Filter by article, discussion, analysis and more to find the exact information you’re looking for
  • Continually updated to bring you the latest reports, trending topics, and coverage analysis