HO-3 Coverages Explained
Coverage A- Dwelling
This amount of insurance applies to the dwelling and any attached structures. The limit of insurance for the dwelling is based on the value of the home and what it would cost to replace the home. This coverage does not reflect the real estate value, it just describes the amount required to rebuild the dwelling to like kind and quality.
Coverage A includes the dwelling described in the policy declarations, including structures attached to the dwelling (such as a screened enclosure attached to the home). This
coverage is usually paid on a replacement cost basis up to the policy limit.
Coverage B- Other Structures
This coverage limit applies to detached structures such as a garage, storage shed or gazebo. The limit of coverage is typically set between 2% and 10% of the dwelling. The insured may be able to purchase a higher limit. Coverage B includes other structures on the residence premises that are separated from the dwelling by clear space. This coverage is usually paid on a replacement cost basis up to the policy limit.
Coverage C- Personal Property
Coverage C provides worldwide coverage for personal property of the insured. Special limits apply to some types of property (jewelry, cash or firearms to name a few). Some property is excluded from coverage. The overall limit for Coverage C is usually between 25% and 75% of the dwelling limit. This coverage includes your clothing, nonattached appliances, and rugs over flooring, etc. Essentially, Coverage C is anything that would fall out if your house was turned upside down. This coverage is usually paid on an actual cash value basis unless your policy is endorsed to replacement cost coverage.
Coverage D- Loss of Use
This coverage applies in the event of a loss under Coverage A. If the insured temporarily were to lose use of the dwelling, this coverage would apply. Payment would be made for expenses incurred to live elsewhere following a loss that makes the home unsuitable for living. Another method used to determine payment for loss of use is fair rental value, which is the amount of rent that could reasonably be charged for the premises less any expenses that do not continue while the premises are unsuitable for living. The limit for loss of use is usually set between 10% and 30% of the amount of insurance on the dwelling. This coverage is usually paid on an actual loss sustained basis up to the policy limit.
Coverage E- Personal Liability
Coverage E insures against a bodily injury or property damage liability loss exposures arising out of the insured’s ownership or use of the residence premises, as well as activities occurring away from the residence premises. Many exclusions do apply(including intentional acts), and your policy should be read for a full list of exclusions. This coverage is usually between $100,000 and $500,000.
Coverage F- Medical Payments to Others
This coverage will pay the necessary medical expenses for bodily injury of others. Coverage applies to accidents that occur on the insured premises or any location when caused by action of the insured. The coverage has a basic limit of $1,000 per person. The
insured may select higher limits. The advantage to this coverage is that you do not have to be legally liable for coverage to apply.
*This blog is designed to summarize basic coverages on form HO-3. Coverage can change depending on policy selection. Please contact Trump Insurance for a copy of your full policy or quote.