Includes copyrighted material of Insurance Services Office, Inc., with its permission.
July 28, 2014
Endorsement to Dwelling Property Forms; Limited or Broad Coverage
Summary: Theft coverage for personal property may be added by endorsement to any of the three dwelling property forms. Two theft endorsements—providing either limited or broad coverage—are available. The limited form provides coverage for direct physical loss to personal property owned or used by the named insured or owned by a residence employee only while the property is at the described location or placed for safekeeping. The broad form provides coverage for property owned or used by "an insured," a broader term defined as the named insured, resident relatives, a student away at school if under age twenty-four, and other residents under the age of 21. The broad form provides on- and off- premises coverage. The broad form also provides automatic removal coverage for personal property at and in-transit to newly acquired principal residences. Both forms contain special limits of liability, the broad form providing coverage on additional types of property not covered under the limited form.
The forms have been revised with the 2014 dwellings program; the new forms are compared with the older forms in this discussion. Note that the earliest effective date of the new program is July 2014, so be sure to check before assuming the 2014 edition is effective in your area.
Topics covered:
A residence that is a dwelling, co-op, or condominium unit must be owner-occupied to be eligible to use broad theft coverage endorsement DP 04 72 07 14. If the residence is an apartment, it must be occupied by a tenant named insured. Once this occupancy requirement is met, both on and off-premises theft coverage is available. However, off-premises coverage may be purchased only if on-premises coverage is also purchased. Further, the limit for off-premises coverage may not exceed the on-premises limit. The minimum theft limit for both on and off premises is $1,000.
For non-owner occupied dwellings, co-ops, condominiums, or for apartments occupied by other than a named insured, limited theft coverage endorsement DP 04 73 07 14 may be purchased. It provides on-premises coverage only and has the same minimum limit of liability—$1,000—as the broad form.
For the limit of liability shown in the Schedule above for this coverage, we insure against direct physical loss to personal property owned or used by you [limited form] or an "insured" [broad form] caused by the Perils Insured Against named below.
A. Perils Insured Against1. Theft, including attempted theft.
2. Vandalism or malicious mischief as a result of theft or attempted theft. This peril does not include:
a. Loss at the Described Location; and
b. Any ensuing loss caused by any intentional and wrongful act committed in the course of the vandalism or malicious mischief; if the dwelling has been vacant for more than 60 consecutive days immediately before the loss. A dwelling being constructed is not considered vacant.
Analysis
The insured perils on both endorsements are theft (including attempted theft) and vandalism and malicious mischief damage resulting from theft. Without endorsement, the dwelling forms do not cover theft of personal property. Although the DP 00 03 07 14covers theft or attempted theft of property if part of a covered building, and vandalism or malicious mischief under coverage A dwelling, and form DP 00 02 07 14 covers vandalism or malicious mischief, by adding one of these endorsements the insured need not have the burden of proving that vandalism arose independently from an attempted theft. And, both endorsements provide theft coverage for personal property, which is not covered by the unendorsed forms.
The insuring agreement of the limited theft coverage form promises to insure against direct physical loss to personal property owned or used by "you." This means the named insured and, if a resident of the same household, the spouse. In contrast, the insuring agreement of the broad theft endorsement refers to coverage for an "insured," a broader term defined as the named insured, resident relatives, a full-time student away at school, and other residents under the age of twenty-one.
The vacancy exclusion does not apply until the dwelling has been vacant for more than sixty consecutive days. There is no coverage for an intentional and wrongful act committed in the course of the vandalism or malicious mischief after the sixty days. The wording has been added to clarify a situation that could arise such as when a thief, to cover the theft, sets fire to the insured building. Without the wording, some courts have held that only coverage for the theft was excluded after the time limit, but the ensuing fire was covered.
The current editions of the forms contain definitions that are similar to definitions in the ISO homeowners 2011 forms. For more information, see ISO Homeowners Definitions.
B. Definitions
The following definitions apply to the coverage provided by this endorsement:1. "Business" means:
a.A trade, profession or occupation engaged in on a full-time, part-time or occasional basis; or
b.Any other activity engaged in for money or other compensation, except the following:
(1)One or more activities, not described in (2) through (4) below, for which no "insured" receives more than $2,000 in total compensation for the 12 months before the beginning of the policy period;
(2)Volunteer activities for which no money is received other than payment for expenses incurred to perform the activity;
(3)Providing home day care services for which no compensation is received, other than the mutual exchange of such services; or
(4)The rendering of home day care services to a relative of an "insured".
2. "Insured" means you and residents of your household who are:
a. You and residents of your household who are:
(1) Your relatives; or
(2) Other persons under the age of 21 and in your care or the care of a resident of your household who is your relative; or
b. A student enrolled in school full-time as defined by the school, who was a resident of your household before moving out to attend school, provided the student is under the age of:
(1) 24 and your relative; or
(2) 21 and in your care or the care of a resident of your household who is your relative.
3. "Residence employee" means:
a.An employee of an "insured", or an employee leased to an "insured" by a labor leasing firm, under an agreement between an "insured" and the labor leasing firm, whose duties are related to the maintenance or use of the Described Location, including household or domestic services; or
b.One who performs similar duties elsewhere not related to the "business" of an "insured".
A "residence employee" does not include a temporary employee who is furnished to an "insured" to substitute for a permanent "residence employee" on leave or to meet seasonal or short-term workload conditions.
Analysis
The definitions track the definitions introduced in the ISO homeowners 2011 program. The definition of insured has been modified to clarify that "insured" includes those under twenty-one who are in the care of resident relatives; the earlier policy just referred to "…any person named above" which could be open to interpretation. The other definitions remain the same.
Certain activities are not considered as business in nature and therefore fall outside exclusionary language. For example, an insured's part-time occupation may be working as a bookkeeper three days a week, while making and selling ceramics at craft shows. The part-time work will probably be considered as business in nature (the insured's part-time occupation), but so long as income from the ceramics is less than $2,000 for a twelve-month period, the income-generating hobby will not be construed as a business.
1.On-Premises Coverage [limited coverage form]The Limit of Liability shown in the Schedule for this coverage is the most we will pay for any one covered loss at the Described Location.
Coverage applies while the property is:
a. At the Described Location if the property is:
(1) Owned or used by you; or
(2) Owned by a "residence employee;" or
b. Placed for safekeeping in any:
(1) Bank, trust or safe deposit company
(2) Public warehouse; or
(3) Occupied dwelling not owned, rented to or occupied by you.
1.On-Premises Coverage [broad coverage form]
The Limit of Liability shown in the Schedule for this coverage is the most we will pay for any one covered loss at the Described Location.
Coverage applies while the property is:
a. At the part of the Described Location occupied by an "insured;"
b. In other parts of the Described Location not occupied exclusively by an "insured;" if the property is:
(1)owned or used by an "insured;" or
(2)owned by a "residence employee;"
c. Placed for safekeeping in any:
(1)Bank, trust or safe deposit company
(2)Public warehouse; or
(3)Occupied dwelling not owned, rented to or occupied by an "insured."
Analysis
Both the limited and broad theft endorsements provide on-premises coverage at the described location if a limit of liability is designated for the coverage. In general, this coverage applies to property that is owned or used by the insured or owned by a residence employee (as defined) at the described location. Further, coverage applies to covered property located at a bank, public warehouse or at an occupied dwelling that is not owned by, rented to, or occupied by the insured if the property is there for safekeeping.
The language of the on-premises coverage provision on the broad theft endorsement states that personal property owned or used by an insured is covered while it is located at any part of the described location. Personal property that is owned by a residence employee is covered only while in parts of the described location not occupied exclusively by an insured; i.e., the residence employee's quarters. Under the broad theft endorsement, therefore, there would be no coverage for clothing belonging to a domestic servant if it was stolen from that part of the described location where an insured resided.
Since use of the limited theft endorsement is intended for non-owner occupied residences, there is no similar restrictive language in its on-premises provision.
Discounts for burglar alarm systems are available for on-premises coverage. Endorsement DP 04 70 12 02 premises alarm or fire protection system, is then added.
2. Off-Premises coverageThis endorsement does not cover loss to personal property away from the Described Location caused by Theft or Vandalism or Malicious Mischief unless a limit is shown above for On-Premises coverage.
The Limit of Liability shown in the Schedule for this coverage is the most we will pay for any one covered loss away from the Described Location.
Coverage applies while the property is away from the Described Location if such property is:
a. Owned or used by an "insured;"
b. Owned by a "residence employee" while in a dwelling occupied by an "insured" or while engaged in the employ of the "insured."
Off-Premises Coverage does not apply to property you remove to a newly acquired principal residence.
Analysis
Off-premises theft coverage is available only on broad theft endorsement DP 04 72. As the form states, an insured may purchase off-premises coverage only if on-premises coverage is purchased. The designated limit cannot exceed the on-premises amount.
The off-premises coverage provision insures covered personal property while it is away from the described location. Covered personal property includes that owned or used by an insured (as defined). The form thus may be used to provide coverage for personal property of an insured student away at school. Covered property also includes property owned by a residence employee while the property is located in a dwelling occupied by an insured and extends to other locations while the employee is engaged in the employ of the insured.
It is specified that off-premises coverage does not apply to property at a newly acquired principal residence. There is special coverage for this exposure on the broad theft endorsement, under the "automatic removal coverage" provision, discussed below.
3. Automatic Removal CoverageIf, during the term of this Policy, you move to a newly acquired principal residence, the Limit of Liability for On-premises Coverage will apply:
a. At each residence; and
b. In transit for a period of 30 days after you begin to move the property there.
When the moving is completed, On-premises Coverage applies at the new Described Location only.
Analysis
Under broad theft coverage endorsement DP 04 72, the limit designated for on-premises coverage also applies at each newly acquired principal residence and for thirty days while property is in transit there. Once the move is completed, property at the new location is covered as a described location under the on-premises coverage provision.
4. Special Limits of Liability [limited form]
These limits do not increase the limit of liability applicable to On-Premises Coverage. The special limit for each category shown below is the total limit for each loss for all property in that category.a. $1,500 on watercraft of all types including their:
(1) Trailers;
(2) Furnishing;
(3) Equipment; and
(4) Outboard motors.
b. $1,500 on trailers not used with watercraft of all types.
c. $2,500 on firearms and related equipment.
4. Special Limits of Liability [broad form]
These limits do not increase the limit of liability applicable to On-Premises Coverage or Off-Premises Coverage. The special limit for each category shown below is the total limit for each loss for all property in that category.
a.$200 on money, bank notes, bullion, gold other than goldware, silver other than silverware, platinum other than platinumware, coins, medals, scrip, stored value cards and smart cards.
b.$1,500 on securities, accounts, deeds, evidences of debt, letters of credit, notes other than bank notes, manuscripts, passports, personal records, tickets and stamps.
c. $1,500 on watercraft of all types, including their:
(1) Trailers;
(2) Furnishings;
(3) Equipment; and
(4) Outboard motors.
d. $1,500 on trailers or semi-trailers not used with watercraft of all types.
e. $1,500 on jewelry, watches, furs, precious and semiprecious stones.
f. $2,500 on firearms and related equipment.
g. $2,500 on silverware, silver-plated ware, goldware, gold-plated ware, platinumware, platinum-plated ware and pewterware. This includes:
(1) Flatware;
(2) Hollowware;
(3) Tea sets;
(4) Trays; and
(5) Trophies;
made of or including silver, gold or pewter.
Analysis
Both the limited and broad theft endorsements (DP 04 73 and DP 04 72) contain special limits of liability to apply to certain types of property. These special limits do not apply in addition to the on and off premises limits; instead, they serve to limit the amount of coverage available for certain specified types of property.
The special limits of liability of the DP 04 72 are similar to those of the current homeowners forms, except the homeowners forms provide coverage for some business property and electronic apparatus; this form does not. Also, the homeowners special limit for securities, etc., includes the cost to research, replace, or restore the information; the theft form does not mention this.
3.Property Not Covered [limited form]
We do not cover:a. Loss caused by:
(1) A tenant, roomer or boarder;
(2) Member of the tenant's household, or their employees;
b.Money, bank notes, bullion, gold, goldware, gold-plated ware, silver, silverware, silver-plated ware, pewterware, platinum, platinumware, platinum-plated ware, coins, medals, scrip, stored value cards and smart cards;
c.Securities, accounts, deeds, evidences of debt, letters of credit, notes other than bank notes, manuscripts, passports, personal records, tickets and stamps;
d.Jewelry, watches, furs, precious and semi-precious stones;
e.Aircraft and parts. Aircraft means any contrivance used or designed for flight, except model or hobby aircraft not used or designed to carry people or cargo;
f.Hovercraft and parts. Hovercraft means a self-propelled motorized ground effect vehicle and includes, but is not limited to, flarecraft and air cushion vehicles;
g.Motor vehicles or all other motorized land conveyances. This includes their equipment and parts while such property is in or upon the vehicle or conveyance.
However, this Paragraph 3.g. does not apply to:
(1) Portable electronic equipment that:
(a) Reproduces, receives or transmits audio, visual or data signals; and
(b) Is designed so that it may be operated from a power source other than the electrical system of motor vehicles and all other motorized land conveyances.
(2) Motor vehicles or other motorized land conveyances not required to be registered for use on public roads or property which are:
(a) Used solely to service a residence;
or
(b) Designed to assist the handicapped;
h.Property held as a sample or for sale or delivery after sale;
i."Business" property;
j.Animals, birds or fish;
k.Credit cards, electronic fund transfer cards or access devices used solely for deposit withdrawal or transfer of funds; or
l.Property separately described and specifically insured by any other insurance.
5.Property Not Covered [broad form]
We do not cover:
a.Aircraft and parts. Aircraft means any contrivance used or designed for flight, except model or hobby aircraft not used or designed to carry people or cargo;
b.Hovercraft and parts. Hovercraft means a self-propelled motorized ground effect vehicle and includes, but is not limited to, flarecraft and air cushion vehicles.
c.Motor vehicles or all other motorized land conveyances. This includes:
(1) Their accessories, equipment and parts; or
(2) Any device or instrument for the transmitting, recording, receiving or reproduction of sound or pictures which is operated by power from the electrical systems of motor vehicles or all other motorized land conveyances, including its accessories. Accessories include antennas, tapes, wires, records, discs or other media that can be used with any device or instrument described above.
This exclusion of property described in c.(1) and (2) above applies only while the property is in or upon the vehicle or conveyance.
We do cover motor vehicles or conveyances not required to be registered for use on public roads or property which are:
(1) Used solely to service the Described Location; or
(2) Designed to assist the handicapped;
d.Property held as a sample or for sale or delivery after sale;
e."Business" property of an "insured" or "residence employee" on or away from the Described Location;
f.Animals, birds, or fish;
g.Property of tenants, roomers and boarders not related to an "insured;"
h.Property while:
(1)At any other location owned, rented to or occupied by any "insured," except while an "insured" is temporarily residing there;
(2)In the custody of any:
(a) Laundry or cleaner;
(b) Tailor;
(c) Presser; or
(d) Dyer;
except for loss by burglary or robbery; or
(3) In the mail;
i. Credit cards, electronic fund transfer cards or access devices used solely for:
(1) Deposit;
(2) Withdrawal; or
(3) Transfer of funds.
j. Property separately described and specifically insured by any other insurance.
Analysis
Although many of the property not covered exclusions are similar to those in the homeowners forms, there are differences to note; specifically, there is no coverage for "business" property whether owned by an insured or a residence employee. The homeowners forms provide some coverage for loss resulting from credit or fund transfer card loss; the dwellings forms do not.
Both theft coverage endorsements exclude coverage for aircraft, hovercraft motor vehicles, credit or electronic fund transfer cards, animals, business property or property held as samples or for sale, and property separately described and specifically insured by other insurance. Although motor vehicles are excluded, an exception is made for vehicles used solely to service the Described Location or to assist the handicapped. The motor vehicle exclusion has been reworded for clarification; it is clear that the exclusion does not apply to portable equipment that can be operated by a power source other than the vehicle itself.
The limited theft endorsement excludes losses caused by a tenant, roomer or boarder, members of the tenant's household or their employees. Additionally, there are specific exclusions for several types of property, those for which special limits exist on the broad theft endorsement. These are the categories of money etc., securities etc., and jewelry etc.
The broad theft endorsement excludes the property of tenants who are not related to an insured, property located off premises unless at a location where an insured is temporarily residing, property while in the mail, and property in the custody of a laundry or cleaners or the like except for loss by burglary or robbery.
Webster's Collegiate Dictionary distinguishes between theft, burglary, and robbery. Burglary has an element of breaking into an establishment, while robbery implies a threat of violence toward a person in carrying out a theft. Therefore, it is unclear whether the form would respond if, say, another customer stole property belonging to an insured from a dry cleaner. Many bailees' forms cover burglary, robbery, and theft, so possibly the insured would have to seek coverage under the establishment's insurance.
D. Conditions
1.Under Condition D. Duties After Loss the following paragraph is added:7. Notify the police in case of loss by theft.
2. Condition I. Other Insurance And Service Agreement is deleted with respect to the coverage provided by this endorsement and replaced by the following:
I. Other Insurance and Service Agreement
If a loss covered by this endorsement is also covered by:
1. Other insurance, we will pay only the proportion of the loss that the limit of liability that applies under this endorsement bears to the total amount of insurance covering the loss; or
2. A service agreement, this insurance is excess over any amounts payable under any such agreement. Service agreement means a:
a. Service plan;
b. Property restoration plan;
c. Home warranty; or
d. Other similar service warranty agreement;
even if it is characterized as insurance.
All other provisions of this policy apply.
Analysis
The conditions section is the same on both endorsements. One condition specifies that it is the insured's responsibility to notify police after a theft loss (because theft is not covered under the unendorsed forms, they do not mention theft); the other specifies that a pro-rata loss settlement applies if there is other insurance responding to a loss. The wording of the condition pertaining to other insurance is amended to simply refer to other insurance; this condition in the dwellings forms refers to other fire insurance.
Note that the condition, makes the coverage excess over any amounts payable under a service or home warranty agreement.
Christine G. Barlow, CPCU
Christine G. Barlow, CPCU, is Executive Editor of FC&S Expert Coverage Interpretation, a division of National Underwriter Company and ALM. Christine has over thirty years’ experience in the insurance industry, beginning as a claims adjuster then working as an underwriter and underwriting supervisor handling personal lines. Christine regularly presents and moderates webinars on a variety of topics and is an experienced presenter.