How is Coverage B calculated in homeowners policies?

In homeowners insurance policies, Coverage B refers to the insurance coverage for other structures on the property, such as detached garages, sheds, fences, and additional buildings that are not attached to the main dwelling. The calculation for Coverage B is typically set at a standard percentage of Coverage A, which is the coverage amount for the dwelling itself.

The correct approach to calculating Coverage B is to take 10% of Coverage A. This means that if a homeowner has a dwelling insured for a specific amount under Coverage A, Coverage B automatically provides coverage for other structures, amounting to 10% of that total. This setup helps ensure that homeowners have a reasonable level of protection for additional structures without having to separately list each structure and its value, promoting efficient coverage in the policy.

In this context, while other options might suggest various percentages or methods for calculation, they do not align with the standard practices established in homeowners insurance. For example, values such as 25% and 15% mentioned in the other choices are not typical calculations for Coverage B, and a percentage of the total premium is unrelated to how coverage amounts are determined in homeowners policies.