In HO policies, what determines the amount an insurer will pay under Coverage D?

• A. The amount of coverage on the dwelling
• B. The insured's income
• C. The replacement cost value of personal property
• D. The number of days lost

Answer: (A)

Coverage D represents Loss of Use, paying for extra living expenses or fair rental value when your home can’t be occupied due to a covered loss. The amount the insurer will pay is limited by the Coverage D limit, which is set as a percentage of the dwelling limit (Coverage A). In practice, that means the size of the dwelling coverage determines how much can be paid under Coverage D—the payout cannot exceed that percentage of the dwelling coverage. For example, if your dwelling limit is 200,000 and Coverage D is 30% of A, the maximum Coverage D payment would be 60,000, regardless of other factors. Income, the replacement cost of personal property, or the number of days displaced do not set the Coverage D amount—the limit tied to the dwelling coverage does.