Dwelling policy forms are monoline policies used to insure residential property. Dwelling property forms are used to insure most dwelling property, including dwellings, in the course of construction. The dwelling may be owner-occupied or non-owner-occupied (rental property). Most dwellings used for residential purposes are eligible for coverage under a dwelling form except farms, structures that have more than four units and any structure used principally for commercial or business purposes.
Currently, the Dwelling '02 program is used in almost every state. This program incorporated language and policy provisions from the Standard Fire policy into a dwelling policy to cover residential property.
The Dwelling '02 program consists of three policy forms, including the:
Dwelling Property Basic Form (DP1 form)
Dwelling Property Broad Form (DP2 form)
Dwelling Property Special Form (DP3 form)
The difference between these forms lies in the various causes of loss (perils) that each policy covers.
Extended Coverages
This is a group of eight additional perils, including:
Windstorm
Hail
Aircraft damage
Riot or civil commotion
Vehicle damage
Volcanic eruption (lava and ash only, not shock waves)
Explosion (does not have to be internal)
Smoke damage
These extended coverages are included automatically in the DP1, 2, and 3 policy forms. An acronym commonly utilized to remember these eight extended coverages is WHARVVES.
Basic Coverage (DP1)
This policy form provides the most limited coverage for dwellings and their contents as compared to the DP2 and DP3 policies. DP1 covers:
Hostile fire
Lightning
Internal Explosion
A hostile fire is one that is burning in an area where it should not be burning. If fire escapes from a wood-burning stove and causes damage to other property, there would be coverage. The fire burning within the wood-burning stove is known as a friendly fire since it is burning where it should be. Damage or loss caused by a hostile fire is covered, while damage caused by a friendly fire is not covered.
Dwelling Property Broad Form (DP2)
The perils insured against in a DP2 policy include all perils covered in a DP1 policy and the perils appearing under Coverage C, named perils covering personal property.
Weight of ice, snow, and sleet, which causes damage to property contained in the building.
Loss or vandalism to covered property caused by burglars
Loss caused by falling objects but not damage to fences, awnings, outdoor equipment, or outdoor radio and television antennas and aerials. Damage to the object that “falls” is not covered.
Loss caused by accidental discharge or overflow (i.e., bursting pipes) of water or steam from plumbing, heating, air conditioning (A/C), or a fire-protective sprinkler system.
Damage caused by the sudden and accidental tearing, cracking, burning, or bulging of a steam or hot water heating (i.e., bursting pipes), air conditioning, or protective sprinkler system.
Loss due to the freezing of a plumbing, heating, A/C or, sprinkler system, or household appliance.
Loss caused by artificially generated electrical current that results in sudden and accidental damage. Tubes, transistors, and similar components are not covered.
Volcanic eruption (other than loss caused by shock waves or tremors.)
An acronym that can help you remember these is BIG AFFECT, as displayed below.
In addition to the above-named perils, DP2 also provides coverage for Collapse and “Glass or Safety Glazing Material.”
The insurer will cover the breakage of glass or safety glazing material which is part of a covered dwelling, storm door or storm window.
Collapse
The insurer will pay for direct physical loss to covered property involving the collapse of a dwelling (or any part of it) as a result of:
A covered peril
Hidden decay
Hidden insect or vermin damage
Weight of contents, equipment, animals or people
Weight of rain which collects on a roof
Use of defective materials
Special form (DP3)
The DP3 is an all-risk policy and provides the broadest protection of all the dwelling fire policies. The DP3 is identical to the DP2 except for the perils insured against (open-risk vs. named peril). An all-risk policy covers all types of direct physical loss EXCEPT those specifically excluded.
All policy forms exclude losses from:
• Ordinances or laws (Require more expensive reconstruction than was used in the original structure i.e., safety glass in place of regular glass in a building)
• Earth movement (Except for direct loss by fire or explosion resulting from earth movement)
• Airborne shockwaves (Typically from volcanic eruption)
• Water damage
Flooding
Water back up into a building
Water leaking or seeping from below ground
Tidal surge
Rapid run-off
Mudslide
• Power interruption (Occurring away from the insured location)
• Insured’s neglect (To save and preserve property following a loss)
• Inherent vice (A characteristic of property causing it to depreciate, spoil, break, or disintegrate)
• War and nuclear hazard
• Insured or someone else at the insured direction destroys property
• Mold and Dry Rot
Dwelling Policy Coverages
DP1, DP2 and DP3 policies all provide four divisions of coverage, sometimes referred to as “insuring agreements.”
Coverage A Dwelling
Coverage B Other Structures
Coverage C Personal Property
Coverage D Rental Value
Coverage A Dwelling
This insuring agreement provides coverage for the dwelling principally used for residential purposes (owner or non-owner occupied). Coverage A also includes structures attached to the dwelling, such as an attached garage or carport. Coverage A also protects against loss of materials and supplies on the residence premises used in the construction or repair of the dwelling and outdoor or building equipment used to service the premises (power tools, riding lawnmowers, etc.).
Coverage B Other Structures
10% of coverage A applies to structures on the residence premises detached from the dwelling by a clear space. “Other Structures” include:
Garage not attached to the dwelling
Swimming pool
Cabana
Any other structures on the premises connected to the dwelling by only a fence, utility line, or similar connection
Exclusions:
Property used for commercial purposes, farming, and manufacturing; or rented to someone other than a tenant for residential use or as a private garage
Damage to land
Coverage C Personal Property
Coverage C will provide protection up to the coverage amount selected by the insured against loss to personal property owned or used by the named insured or resident family members while on the insured premises. The default amount of coverage is 50% of coverage A limits. A limited amount (10% of the contents limit) is provided for personal property away from the premises. This coverage is worldwide.
If personal property is moved to a newly acquired principal residence, the property is covered at both locations for thirty days.
Personal property not covered includes:
Accounts
Bills
Currency, coins, bullion, gold, silver
Deeds
Securities
Evidence of debt
Manuscripts
Passports
Tickets
Stamps
Animals, birds, and fish
Aircraft and its parts
Motor vehicles (except those used to maintain or service the premises or assist the handicapped)
Watercraft (row boats and canoes under 26 feet long are covered)
Electronic data and discs
Credit card or fund transfer cards
Property of roomer, renter, or boarder
Coverage D Loss of Rent
If part of the covered residence that is held for rental (or actually rented) to others becomes uninhabitable due to a covered loss under Coverage A, B, or C, the contract will pay the fair rental value. The coverage amount to be carried is selected by the named insured and may be up to 10% of Coverage A.
Coverage E Additional Living Expense
Sometimes referred to as “Loss of Use,” this coverage section will pay any increased expenses incurred by the insured if a residence becomes uninhabitable due to a covered loss, and the insured must move out while it is being repaired, replaced, or rebuilt, the contract will pay any necessary increased expenses incurred by the insured.
If civil authority orders the house to be vacated due to an impending insured peril, the insurer will pay additional living expenses for up to two weeks (e.g., if the insured is required to leave home due to a flood, fire, infectious disease, etc.).
Lesson Summary
Dwelling policies are monoline policies used to insure residential properties. Here are some key points about dwelling policies:
Most dwelling properties are eligible for coverage, except farms and structures with more than four units or used mainly for commercial purposes.
The Dwelling '02 program is utilized in most states, featuring three policy forms: Dwelling Property Basic Form (DP1), Dwelling Property Broad Form (DP2), and Dwelling Property Special Form (DP3).
Extended coverages included in DP1, DP2, and DP3 automatically are:
Windstorm
Hail
Aircraft damage
Riot or civil commotion
Vehicle damage
Volcanic eruption
Explosion
Smoke damage
Basic Coverage (DP1) includes coverage for:
Hostile fire
Lightning
Internal Explosion
Dwelling Property Broad Form (DP2) covers more perils than DP1, including all DP1 perils and additional ones like loss due to the weight of ice, snow, and sleet, vandalism by burglars, and accidental discharge or overflow of water or steam.
The Special Form (DP3) is an all-risk policy providing broad protection, covering all types of direct physical loss except for specific exclusions.
Dwelling policy coverages include:
Coverage A: Dwelling
Coverage B: Other Structures
Coverage C: Personal Property
Coverage D: Loss of Rent
Exclusions from dwelling policies often include losses from ordinances or laws, water damage, power interruption away from the insured location, and inherent vice.
Chapter Vocabulary
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These extended coverages are included automatically in the DP1, 2, and 3 policy forms. An acronym commonly utilized to remember these eight extended coverages is WHARVVES.
Dwelling Policy Coverages