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section providing protection in four areas:
- Coverage A (Home)-the structure of the home (basic contract amount). Other property coverages in Section I are expressed as a percentage of Coverage A.
- Coverage B (Garage or Appurtenant Private Structures)-structures not attached to or part of the home, covered up to 10% of the basic home structure.
- Coverage C (Contents or Personal Property)-coverage of 40 to 50% (depending on the form selected) of the structural coverage of the home for the contents or personal property in the home; coverage of up to 10% applies to contents away from the home. For example, a home whose value is $100,000 would have coverage on the contents of $50,000 (assuming 50% contents coverage); away from home, contents coverage would be up to $5000.
- Coverage D (Additional Living Expenses)-coverage if the home is damaged or destroyed and the insured must seek temporary lodging. Reimbursement is 10 to 20% of the structural coverage of the home, depending on the form selected,
All four property coverages A, B, C, and D are offered through one of the following forms:
- Form No. 1 (Basic or Standard)-coverage for fire, lightning, windstorm, hail, explosion, smoke, theft, vandalism, malicious mischief, riot, civil commotion, glass breakage, vehicles, and aircraft.
- Form No. 2 (Broad)-coverage for a broader spectrum of perils than under Form No. 1.
- Form No. 3 (Special)-provides that Coverage A (Home), Coverage B (Garage or Appurtenant Private Structures), and Coverage C (Contents or Personal Property) are insured on an all risks basis. This form is sometimes called "landlords and tenants insurance" since the building and garage or appurtenant private structure and contents are covered on an all risks basis. There are a number of exclusions under Form No. 3.
- Form No. 4 (Contents Broad Form)-coverage only for the contents of a dwelling (Coverage C) and additional living expense (Coverage D) as the result of the perils listed in Form No. 2. This form is called the "renters form" since it does not cover damage to the structure of an apartment building, its garages or appurtenants.
- Form No. 6 (Condominium Unit Owners Form) -provides the same coverage as Form No. 4 but extends coverage for damage to additions and/or alterations that the unit owner may have made inside the unit. Coverage goes into effect as an excess amount above that insurance (if any) that the condominium association may have.
Numerous endorsements can be added to each one of the above forms to increase the limits of coverage and the properties insured. For example, specified property such as jewelry, furs, silverware, and guns can be added through a valuable personal articles endorsement. Also, an inflation guard endorsement (reflecting increases in the cost of construction) can be added to Coverage A, which automatically increases Coverages B, C, and D, since they are expressed as a percentage of Coverage A.
The insured is obligated to take certain actions following a loss, including: notifying the company or agent immediately; if the loss is due to theft, notifying the police immediately; if credit cards are stolen, notifying the credit card company immediately; and protecting the property from further damage.
There is usually an 80% coinsurance requirement which means that the insured must carry insurance on a replacement cost basis of at least 80%. For example, a home is worth $200,000, and a fire does $50,000 damage. If the insured carries $150,000 of insurance, only $46,875 would be covered according to the following formula:
| Amount of Insurance Carried
80% Insurance to Value
Replacement Cost Basis
|Replacement Cost Basis|
If, however, the insured had carried an 80% insurance to a value of $160,000, then the total loss of $50,000 would have been to the following formula:
form no. 2 (broad), homeowners insurance policy
form no. 3 (special), homeowners insurance policy
form no. 4 (contents broad form), homeowners insurance policy
form no. 6 (condominium unit owner's form), homeowners insurance policy
residence and outside theft insurance