4.2 Section I Coverages A-D and Additional Coverages

Arkansas Property & Casualty Insurance State

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1 Standalone Coverage Map

Standalone Coverage Map

2 Introduction: Arkansas Property & Casualty Insurance Exam Overview

Arkansas Property & Casualty Exam Overview

3 National Portion: Insurance Fundamentals

1.1 Risk, Hazards, Perils, and the Law of Large Numbers 1.2 Insurable Interest, Indemnity, and Other Insurance Principles 1.3 Insurance Contract Law and Elements 1.4 Policy Structure: Declarations, Insuring Agreement, Conditions, Exclusions 1.5 Parties, Agents vs. Brokers, and Authority

4 National Portion: Property Insurance Concepts

2.1 Causes of Loss / Named-Peril vs. Open-Peril 2.2 Valuation: ACV, Replacement Cost, and Functional Value 2.3 Coinsurance and the Coinsurance Formula 2.4 Deductibles, Limits, and Loss Settlement 2.5 Common Property Policy Conditions and Clauses

5 National Portion: Dwelling Policies (DP)

3.1 Dwelling Policy Forms DP-1, DP-2, DP-3 3.2 Dwelling Coverages A-E and Other Coverages 3.3 Dwelling Perils, Conditions, and Endorsements 3.4 Mobile Home and Specialized Dwelling Coverage

6 National Portion: Homeowners Policies - Forms & Section I

4.1 Homeowners Forms HO-2 through HO-8 and Eligibility 4.2 Section I Coverages A-D and Additional Coverages 4.3 Section I Perils Insured Against and Exclusions 4.4 Replacement Cost vs. ACV and Loss Settlement in Homeowners

7 National Portion: Homeowners Policies - Section II & Endorsements

5.1 Section II Coverages E (Liability) and F (Medical Payments) 5.2 Homeowners Conditions and Duties After Loss 5.3 Common Homeowners Endorsements (scheduled property, water backup, ordinance or law)

8 National Portion: Personal Auto Policy - Liability & Injury

6.1 Personal Auto Policy Structure and Eligibility 6.2 Part A Liability and Supplementary Payments 6.3 Part B Medical Payments 6.4 Part C Uninsured/Underinsured Motorists

9 National Portion: Personal Auto Policy - Physical Damage & Duties

7.1 Part D: Coverage for Damage to Your Auto 7.2 Exclusions and Part E: Duties After an Accident 7.3 Part F: General Provisions, Endorsements, and No-Fault Concepts

10 National Portion: Liability Insurance Concepts

8.1 Negligence, Torts, and Legal Liability 8.2 Defenses, Damages, and Vicarious Liability 8.3 Occurrence vs. Claims-Made Triggers 8.4 Bodily Injury, Property Damage, and Personal/Advertising Injury

11 National Portion: Commercial Property Insurance

9.1 Commercial Package Policy Structure and Common Policy Conditions 9.2 Building and Personal Property Coverage Form (BPP) 9.3 Causes of Loss Forms (Basic, Broad, Special) 9.4 Business Income and Extra Expense 9.5 Commercial Property Endorsements and the BOP

12 National Portion: Commercial General Liability - Coverages

10.1 CGL Coverage A: Bodily Injury and Property Damage Liability 10.2 CGL Coverage B: Personal and Advertising Injury, Coverage C: Medical Payments 10.3 Who Is an Insured and Supplementary Payments

13 National Portion: Commercial General Liability - Limits, Triggers & Exclusions

11.1 CGL Limits of Insurance and Aggregates 11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates 11.3 Key CGL Exclusions and Endorsements

14 National Portion: Commercial Auto Insurance

12.1 Business Auto Coverage Form and Covered Auto Symbols 12.2 Commercial Auto Liability and Physical Damage 12.3 Motor Carrier / Trucking and MCS-90 12.4 Garage Coverage Form and Garagekeepers 12.5 Commercial Auto Endorsements

15 National Portion: Workers Compensation

13.1 Workers Compensation Statutory Background and Benefits 13.2 Part One (Workers Comp) and Part Two (Employers Liability) 13.3 Premium Basis, Experience Modification, and Classification 13.4 Other States, USL&H, and Federal Acts 13.5 Workers Comp Exclusions and Endorsements

16 National Portion: Other Commercial Lines - BOP, Crime & Marine

14.1 Businessowners Policy (BOP) in Depth 14.2 Crime and Fidelity Coverage 14.3 Inland Marine and Nationwide Marine Definition 14.4 Ocean Marine Coverages (Hull, Cargo, Freight, P&I)

17 National Portion: Other Commercial Lines - Specialty & Professional

15.1 Farm and Agricultural Coverage 15.2 Commercial Umbrella and Excess Liability 15.3 Professional Liability and Errors & Omissions 15.4 Directors & Officers and Employment Practices Liability

18 National Portion: Other Commercial Lines - Surety, Flood & Specialty

16.1 Surety and Fidelity Bonds 16.2 National Flood Insurance Program (NFIP) 16.3 Cyber, Aviation, and Other Specialty Lines

19 National Portion: Insurance Regulation & Market Conduct

17.1 State Regulation, Licensing, and the McCarran-Ferguson Act 17.2 Rates, Forms, Solvency, and Guaranty Associations 17.3 Producer Authority, Fiduciary Duty, and Company Operations

20 National Portion: Ethics & Unfair Trade Practices

18.1 Unfair Trade Practices and Unfair Claims Settlement 18.2 Producer Ethics, Errors & Omissions Exposure, and Fiduciary Conduct 18.3 Privacy, Fraud, and Consumer Protection

21 Chapter 1: Arkansas P&C Insurance Regulation & Licensing

1.1 Arkansas Insurance Department 1.2 Arkansas P&C Producer Licensing Requirements 1.3 Arkansas Producer Responsibilities

22 Chapter 2: Arkansas Property Insurance

2.1 Arkansas Homeowners Insurance 2.2 Arkansas Commercial Property Insurance

23 Chapter 3: Arkansas Casualty & Auto Insurance

3.1 Arkansas Auto Insurance Requirements 3.2 Arkansas Liability Insurance 3.3 Arkansas Workers' Compensation Insurance

24 Chapter 4: Arkansas Ethics & Professional Conduct

4.1 Ethical Practices and Consumer Protection

4.2 Section I Coverages A-D and Additional Coverages

Key Takeaways Explain This Topic AI

Section I limits derive from Coverage A: B = 10%, C = 50% (40-70% range), D = 30% in the HO-3.

Coverage A covers the dwelling and ATTACHED structures; Coverage B covers detached structures separated by clear space (not rented or business-used).

Coverage C carries theft sublimits: $1,500 jewelry, $2,500 silverware, $2,500 firearms, $200 money, $1,500 securities/watercraft.

Jewelry's $1,500 cap is THEFT-only; jewelry lost to fire is paid up to the full Coverage C limit; schedule with HO 04 61 for higher theft limits.

Coverage D pays ALE plus fair rental value with no deductible; many Additional Coverages (debris, trees, ordinance-or-law) pay above the policy limits.

Last updated: June 2026

4.2 Section I Coverages A-D and Additional Coverages

Every homeowners policy is split into Section I (property) and Section II (liability) . Section I contains four lettered property coverages plus a list of Additional Coverages. The exam tests the limits as a percentage of Coverage A , because most HO limits are derived from the dwelling amount the insured selects.

Section I Coverages A through D

Cov Name Insures Default Limit
A Dwelling The house and attached structures (garage, deck) Amount selected by insured
B Other Structures Detached structures: fence, shed, detached garage 10% of Coverage A
C Personal Property Contents owned/used by an insured, worldwide 50% of Coverage A (range 40%-70%)
D Loss of Use ALE + fair rental value when home uninhabitable 30% of Coverage A (HO-3)

Worked example: a home insured for Coverage A = $300,000 automatically carries Coverage B = $30,000 , Coverage C = $150,000 , and Coverage D = $90,000 unless the insured buys higher amounts.

Coverage A and B details

Coverage A includes the dwelling and structures attached to it (an attached garage or breezeway), plus materials and supplies on the residence premises used to build/repair the dwelling.

Coverage B covers structures separated by clear space (a detached garage, gazebo, or yard fence). Structures rented to others for any use other than as a private garage are EXCLUDED, and structures used for business are excluded under Coverage B.

Coverage C special sublimits (a heavy exam target)

Coverage C is named perils under HO-2/3/4/6 and is subject to internal sublimits for theft-prone or hard-to-value property. These caps apply per occurrence even though the overall Coverage C limit is much higher:

Property Class Special Limit
Money, bank notes, coins $200
Securities, deeds, manuscripts $1,500
Watercraft (incl. trailers/motors) $1,500
Jewelry, watches, furs (THEFT) $1,500
Silverware/goldware (THEFT) $2,500
Firearms (THEFT) $2,500
Business property on premises $2,500

Trap: the jewelry $1,500 cap applies only to theft , not to a fire or other covered peril — jewelry destroyed by fire is paid up to the full Coverage C limit. To insure jewelry above the theft cap, use a scheduled personal property endorsement (HO 04 61) .

Coverage D — Loss of Use

Coverage D pays the necessary increase in living expenses (ALE) so the household can maintain its normal standard of living while the home is uninhabitable, plus fair rental value if part of the home was rented. It also pays civil authority loss of use (up to two weeks) when a neighboring covered peril forces an evacuation. Coverage D is NOT subject to a deductible. The key word is increase : if the family normally spends a certain amount on housing and food, the policy reimburses only the difference between normal spending and the higher displaced cost, not the entire hotel and restaurant bill.

Optional changes to the percentages

The default percentages are starting points, not ceilings. An insured can buy higher Coverage B (for an expensive detached barn or pool house), increased Coverage C up to 70% of Coverage A, or even reduced Coverage C in some states for clients with few possessions. Condo owners frequently raise the HO-6 Coverage A limit far above the $1,000 minimum to cover extensive built-in upgrades. The exam expects you to start from the standard percentage, then apply any optional limit stated in the declarations, and never to assume a higher limit exists without a stated endorsement.

Additional Coverages (paid in addition to the limits above)

Debris removal : included; if debris + loss exceed the limit, an extra 5% is available.

Reasonable repairs , trees/shrubs/plants (5% of Cov A, max $500 per item, named perils only — NOT wind/hail to plants), fire department service charge ($500), property removed (30 days at another location), credit card/forgery ($500), loss assessment ($1,000), collapse , landlord's furnishings , and ordinance or law (10% of Cov A).

Coverage C is worldwide and follows the insured

A tested feature of Coverage C is its worldwide scope: a laptop stolen from a hotel room in another country is covered, subject to the same sublimits. Property usually situated at a second residence is limited to 10% of Coverage C or $1,000, whichever is greater. Personal property of guests and residence employees is covered while in any residence the insured occupies. The exam contrasts this portability with Coverage A and B, which are fixed to the residence premises described on the declarations and do not travel.

Distinguishing Additional Coverages from the four lettered limits

A recurring trap pairs an Additional Coverage with a lettered coverage to see whether the candidate double-counts limits. Debris removal, ordinance or law (10%), trees and shrubs (5%), and the fire-department service charge ($500) are paid on top of Coverages A through D, not subtracted from them. The credit-card/forgery and loss-assessment coverages each carry low default limits ($500 and $1,000) that the insured can increase by endorsement. When a question asks for a 'total recovery,' add the relevant Additional Coverage amounts to the base coverage payment.