Topics covered:

Limits of liability

Section I coverages—overview

Coverage A—dwelling

Coverage B—other structures

Coverage C—personal property

Special limits of liability

How the deductible applies to the special limits

Property not covered

Business property exclusions

Coverage D—loss of use

Additional coverages

Limits of Liability

 Except in the case of form HO 00 06 05 11, the state pages of the homeowners manual specify the minimum amount for which homeowners coverage A (dwelling coverage) may be written. (With respect to form HO 00 04 05 11, which does not include coverage A, the state pages specify the minimum amount for coverage C—personal property.) The countrywide general rules provide for a $5,000 minimum amount of dwelling coverage (sometimes referred to as additions and alterations coverage) under the HO 00 06, and allow for an increase in the minimum limit.

 Minimum limits of liability are also prescribed by the general manual rules for other section I coverages, defined as percentages of whatever amount has been chosen for coverage A. These limits are:

 • Coverage B—Other Structures: 10 percent of the coverage A amount.

 • Coverage C—Personal Property: 50 percent of the coverage A amount, but refer to the state pages in the case of forms HO 00 04 and HO 00 06.

 • Coverage D—Loss of Use: Has been changed to 10 percent of the coverage A amount for form HO 00 08 in the 2011 form; 30 percent of coverage A for forms HO 00 02 05 11, HO 00 03 05 11 and HO 00 05; 30 percent of the coverage C amount for form HO 00 04; and 50 percent of coverage C for form HO 00 06. The limit of liability for coverages C and D may be increased over the specified minimum limits in any of the homeowners forms. A lower limit of liability may be selected for coverage C under forms HO 00 02, HO 00 03, or HO 00 05. The lower limit must be not less than 40 percent of the coverage A limit.

 Section I Coverages—Overview

 Insurance provided under Section I of the homeowners policy is divided into five coverage parts:

 1. Coverage A—Dwelling. Includes on-premises construction materials and supplies (and, in form HO 00 06, building additions and alterations and certain items of real property used by the insured or which the insured is responsible for insuring—see Homeowners Form HO 00 06—Unit Owners Insurance. Coverage A is not included in tenants' coverage form HO 00 04 (but a limited amount for additions and alterations is included in the additional coverages; more coverage may be purchased by endorsement).

 2. Coverage B—Other Structures. Covers other structures located on the premises and not connected to the dwelling. This is not included in forms HO 00 04 or HO 00 06, although coverage A of form HO 00 06 applies to items of real property or structures on the residence premises.

 3. Coverage C—Personal Property. Applies anywhere in the world to property owned or used by an insured. At the insured's request, also covers property of others while it is located on the part of the residence premises occupied by an insured, and property of a guest or residence employee while in any residence occupied by an insured.

 4. Coverage D—Loss of Use. Consists of three loss of use coverages: (1) additional living expense; (2) fair rental value; and (3) prohibited use.

 5. Additional Coverages. There are twelve additional coverages for incidental exposures: (1) debris removal; (2) reasonable repairs; (3) trees, shrubs, other plants; (4) fire department service charge; (5) property removed; (6) credit card, fund transfer card, forgery and counterfeit money; (7) loss assessment; (8) collapse; (9) glass or safety glazing material; (10) landlord's furnishings; (11) ordinance or law; and (12) grave markers. Not all of the additional coverages are included in each form. Form HO 00 04, for example, omits landlord's furnishings but includes as additional coverage (10) building additions, alterations, fixtures, improvements, and installations made or acquired by the named insured. A detailed discussion of the property coverages follows.

 Deductible

 The deductible clause has been removed from the property coverage agreements and is now contained in the conditions section. The language is basically the same except for specifications that if two deductibles apply that only the highest deductible will be applied to the loss. This makes it clear that unless otherwise noted, the deductible applies.

Coverage A—Dwelling

A.Coverage A—Dwelling

1.We cover:

a.The dwelling on the “residence premises” shown in the Declarations, including structures attached to the dwelling; and

b.Materials and supplies located on or next to the “residence premises” used to construct, alter or repair the dwelling or other structures on the “residence premises.”

2.We do not cover land, including land on which the dwelling is located.

 Analysis

 In forms HO 00 02, HO 00 03, HO 00 05, and HO 00 08, coverage A applies to the dwelling on the residence premises designated in the policy declarations; to structures attached to the dwelling (such as an attached garage); and to materials and supplies located at the residence premises or adjacent to it to be used in the construction, alteration, or repair of the dwelling or another insured structure (i.e., insured under either coverage A or B). The last provision is of importance when a policy is written, as it may be, on a dwelling still under construction.

 The insured dwelling under coverage A must be used principally as a private residence. Under current ISO rules, a dwelling containing up to four units may be written on a homeowners policy, so long as the named insured resides in one unit. Land is excluded from any coverage.

 Coverage B—Other Structures