Dwelling vs Contents vs Loss of Use Coverage

The four property coverages on a homeowners policy

After a loss, the adjuster’s estimate and the insurer’s payment letter often split your claim into lettered coverages. Knowing what each letter means helps you see what was counted and what was left out.

Most Florida homeowners policies are built on the standard Homeowners 3 form. Your insurer may use its own version, so check your policy, but the structure is usually the same (ISO HO 00 03 sample):

• Coverage A, Dwelling. The house and structures attached to it, plus materials on site for building or repairing it. Land is not covered.
• Coverage B, Other Structures. Structures set apart from the house by clear space, including ones connected only by a fence or utility line.
• Coverage C, Personal Property. Belongings owned or used by an insured.
• Coverage D, Loss of Use. Additional living expense, fair rental value, and a short civil authority benefit.

Coverages A and B usually insure against direct physical loss from any cause not excluded. Coverage C usually covers only a list of named perils, such as fire, windstorm and theft. That difference is why the same storm can be covered for the walls but treated differently for what was inside.

Dwelling and other structures: how they are paid

Buildings are usually settled at replacement cost, with actual cash value paid first and the rest paid as repairs are done. Florida requires the insurer to pay at least the actual cash value of the loss, less the deductible, at the start, and the remaining amounts as work is performed and expenses are incurred. On a total loss of the home, the insurer must pay replacement cost without holding back depreciation (s. 627.7011(3)). The mechanics of that gap are in ACV vs RCV.

Two details often change the number. First, the standard form pays full replacement cost only if your dwelling limit was at least 80 percent of the full replacement cost of the building just before the loss. Second, structures that are not buildings, such as a fence, are settled at actual cash value under the standard form.

Code upgrades are a separate pot. Florida insurers must offer ordinance or law coverage of 25 or 50 percent of the dwelling limit, and a policy is treated as including the 25 percent level unless you rejected it in writing. That coverage applies only to the damaged part of the house unless total damage exceeds 50 percent of its replacement cost (s. 627.7011(1) and (2)). Florida also requires reasonable repair or replacement in adjoining areas when new materials do not match, unless the policy provides otherwise (s. 626.9744).

What each coverage pays for and what usually proves it

Contents: the inventory does the work

The standard form settles personal property at actual cash value, which is replacement cost minus depreciation. Florida requires insurers to offer replacement cost coverage for personal property, and lets them offer a version that pays actual cash value first and the rest as you send receipts for replacements (s. 627.7011(3)(b)). Your declarations page shows which one you have.

Most policies also set special limits for categories like money, jewelry, firearms and silverware. Those limits do not raise your overall contents limit, so check them before you list high-value items.

The standard form asks you to prepare an inventory showing quantity, description, actual cash value and amount of loss for each damaged item, with bills and receipts attached. For a list of what to record and tools that help, see:

• Home inventory tools for Florida homeowners
• Documenting storm damage before you clean up

Loss of use: when you cannot stay in your home

Coverage D is the coverage people forget to claim. Under the standard form, if a covered loss makes the part of the home where you live not fit to live in, the insurer covers any necessary increase in living expenses so your household can keep its normal standard of living. It pays the increase over what you normally spend, not your entire cost of living.

Payment lasts for the shortest time needed to repair or replace the damage, or for your household to settle elsewhere if you move for good. If you rent part of the home to others, fair rental value covers the lost rent, less expenses that stop while it is unfit. If a civil authority bars you from your home because of covered damage to a neighboring property, the form pays for no more than two weeks. These time periods are not cut off when the policy expires.

Coverage D limits are often a percentage of Coverage A. Citizens’ HO-3 coverage worksheet, for example, lists it at 10 percent of Coverage A (Citizens HO-3 worksheet). Keep receipts for hotel, rent, meals above your usual grocery bill, laundry and extra mileage. Note that a federal flood policy does not cover living expenses, as explained in wind vs flood coverage. Adjusterman is not affiliated with Citizens.

How the coverages work together in one claim

Picture a storm that tears open part of a roof. Coverage A pays for the roof, the soaked drywall and the ruined flooring. Coverage C pays for the rain-damaged couch, because the wind created the opening first. Coverage B pays for the fence that blew down. Coverage D pays the added cost of a rental while the house dries out and is rebuilt.

Under the standard form, the deductible applies once to the total of all property loss payable for that loss, not once per coverage. Payments under Coverage A or B usually list your mortgage company as a payee when it is named on the policy, while contents and living expense payments usually do not.

When an estimate leaves out a whole coverage, the claim can look paid while real costs go unclaimed. Ask the insurer for a payment breakdown by coverage, and compare it to your inventory and your receipts.

Getting ready for the inspection

Bring your declarations page, your inventory, repair estimates and every living expense receipt to the inspection. The next step is covered in how to prepare for a claim inspection. If you want help building a claim across all four coverages, Adjusterman handles homeowners claims statewide, and a free claim review can tell you whether you have covered damage and which coverages it falls under.