Summary: Insurance Services Office's (ISO) dwelling property program was revised in 2014. Many of the changes incorporated into the forms, such as ordinance and law, had been added by amendatory endorsement beginning in 1994 or were added in the 2002 updates. Three dwelling program property forms are available: DP 00 01 07 14 (basic); DP 00 02 07 14 (broad); and DP 00 03 07 14 (special). Each provides: coverage A, dwelling; coverage B, other structures; coverage C, personal property, coverages D and E, time element, and other coverages. A brief discussion of the use of the forms for condominiums is included.
Discussions of Perils, Exclusions and Endorsements may be found in the following articles:
Dwelling Property Forms – Exclusions and Endorsements Topics Covered:
General Exclusions
A. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area.
1.Ordinance Or Law Ordinance Or Law means any ordinance or law:
a.Requiring or regulating the construction, demolition, remodeling, renovation or repair of property, including removal of any resulting debris. This Exclusion A.1.a. does not apply to the amount of coverage that may be provided under Other Coverage 12. Ordinance Or Law; b.The requirements of which result in a loss in value to property; or c.Requiring you or others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, pollutants. Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed. This exclusion A.1. applies whether or not the property has been physically damaged.
2.Earth Movement Earth Movement means:
a.Earthquake including land shock waves or tremors before, during or after a volcanic eruption; b.Landslide; mudslide or mudflow; c.Subsidence or sinkhole; or d.Any other earth movement including earth sinking, rising or shifting; This Exclusion A.2. applies regardless of whether any of the above, in A.2.a. through A.2.d., is caused by an act of nature or is otherwise caused. However, direct loss by fire or explosion resulting from any of the above, in A.2.a. through A.2.d., is covered.
3. Water This means:
a. Flood, surface water, waves, including tidal wave and tsunami, tides, tidal water, overflow of any body of water or spray from any of these, all whether or not driven by wind, including storm surge; b.Water which:
(1)Backs up through sewers or drains; or (2)Overflows or is otherwise discharged from a sump, sump pump or related equipment;
c. Water below the surface of the ground, including water which exerts pressure on, or seeps, leaks or flows through a building, sidewalk, driveway, patio, foundation, swimming pool or other structure; or d. Waterborne material carried or otherwise moved by any of the water referred to in A.3.a. through A.3.c. of this exclusion.
This Exclusion A.3. applies regardless of whether any of the above, in A.3.a. through A.3.d., is caused by an act of nature or is otherwise caused. This Exclusion A.3. applies to, but is not limited to, escape, overflow or discharge, for any reason, of water or waterborne material from a dam, levee, seawall or any other boundary or containment system. However, direct loss by fire or explosion resulting from any of the above, in A.3.a. through A.3.d., is covered.
4.Power Failure Power Failure means the failure of power or other utility service if the failure takes place off the Described Location. But if the failure of power or other utility service results in a loss, from a Peril Insured Against on the Described Location, we will pay for the loss caused by that Peril Insured Against. 5.Neglect Neglect means your neglect to use all reasonable means to save and preserve property at and after the time of a loss. 6.War War includes the following and any consequences of any of the following:
a.Undeclared war, civil war, insurrection, rebellion or revolution; b.Warlike act by a military force or military personnel; c.Destruction or seizure or use for a military purpose. Discharge of a nuclear weapon will be deemed a warlike act even if accidental.
7.Nuclear Hazard This Exclusion A.7. pertains to Nuclear Hazard to the extent set forth in the Nuclear Hazard Clause of the Conditions. 8.Intentional Loss Intentional Loss means any loss arising out of any act you or any person or organization named as an additional insured commits or conspires to commit with the intent to cause a loss. In the event of such loss, neither you nor any such person or organization is entitled to coverage, even those who did not commit or conspire to commit the act causing the loss. 9.Governmental Action Governmental Action means the destruction, confiscation or seizure of property described in A, B or C by order of any governmental or public authority. This exclusion does not apply to such acts ordered by any governmental or public authority that are taken at the time of a fire to prevent its spread, if the loss caused by fire would be covered under this policy.
B. We do not insure for loss to property described in Coverages A and B caused by any of the following. However, any ensuing loss to property described in Coverages A and B not precluded by any other provision in this Policy is covered.
1.Weather conditions. However, this exclusion only applies if weather conditions contribute in any way with a cause or event excluded in A. above to produce the loss. 2.Acts or decisions, including the failure to act or decide, of any person, group, organization or governmental body. 3.Faulty, inadequate or defective;
a.Planning, zoning, development, surveying, siting; b.Design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction; c.Materials used in repair, construction, renovation or remodeling; or d.Maintenance; of part or all of any property whether on or off the Described Location.
Analysis
The general exclusions found in the basic, broad, and special forms apply to all insured perils unless the policy states otherwise. All three forms contain the nine general exclusions quoted above. They are prefaced with what has become the standard language to address potential concurrent causation situations. It states that if an excluded peril applies to a loss—regardless of other events that contribute before, during, or after the loss—no payment is made. As is usual in property insurance, the dwelling forms exclude any loss that might arise from "any ordinance or law requiring or regulating the construction, demolition, remodeling, renovation or repair of property, including removal of any resulting debris" other than that provided in other coverage 12.
By adding building ordinance or law coverage endorsement DP 04 74 12 02, form DP 00 01 can be amended to nullify the ordinance or law exclusion to cover increased construction costs or demolition. Endorsement DP 04 71 12 02 may be used to purchase an increased amount of coverage under forms DP 00 02 and DP 00 03.
Only direct loss by fire or explosion resulting from earth movement is covered. The 2014 form now states that the exclusion applies whether any loss is caused by an act of nature or any other cause; the old form stated human or animal forces, or any act or nature. The revised wording broadens the exclusion to cover anything possible that could cause earth movement, from fracking to heavy equipment Coverage against earthquake is available by adding endorsement DP 04 69 07 14. Coverage under the endorsement also applies to damage caused by land shock waves associated with volcanic action. Coverage does not include the cost of filling land. The base deductible is five percent of the limit of liability for each coverage, subject to a minimum of $250. The deductible does not apply to coverages D and E (additional living expense and fair rental value). Instead, the deductible applies to the limit of liability of coverage A, B or C, whichever is greatest. All earthquake shocks that occur within a seventy-two hour period are considered a single earthquake.
It is also possible to write a policy to cover only the earthquake exposure. Refer to the insurance company for the endorsement to be added to either the DP 00 01 or the DP 00 02. Loss by flood, sewer backup, or below-surface water is excluded; ensuing direct loss by fire or explosion is covered. See Water Exclusion Clause pages for further discussion of this standard property insurance exclusion. The 2014 has included tsunami and storm surge, whether or not driven by wind in excluded causes of loss. Likewise, waterborne material carried by any of the excluded water sources is excluded, and all causes are excluded whether caused by nature or other causes. Also excluded is water escaping, overflowing or discharging from a dam, levee, seawall or other containment system. After Hurricane Katrina and the problems with the levees overflowing, the exclusion was changed to be sure that such perils were excluded. Loss attributable to off-premises interruption—for example, spoilage of refrigerated food caused by a blackout—is excluded. If, however, the off-premises power interruption results in loss by a covered peril—freezing of plumbing under form DP 00 02, for example—there is coverage for loss caused by that peril. The exclusion does not apply to loss by power interruption originating from damage on the insured premises caused by a peril insured against.
The policy does not cover loss resulting from the named insured's neglect to attempt to save and preserve property at and after the time of loss.
For a discussion of the war exclusion, a common feature in most property insurance policies, see War Exclusion Clause.
For a discussion of the standard nuclear hazard exclusion, see Nuclear Exclusion Clauses. The intentional loss exclusion is added to the dwelling property forms for the purpose of addressing the issue of arson by insureds, although, of course, the clause does not single out arson.
New in the forms is exclusion 9. governmental action. An insured cannot claim, for example, that property seized as part of a drug operation was stolen by the government and seek insurance coverage. The exclusion does not apply if the property is seized or destroyed to prevent the spread of a fire, but only if the loss caused by a fire would be covered under the policy. Thus, an insured arsonist whose property is seized to prevent the spread of a fire he or she started could not claim coverage.
Both the basic and special dwelling forms each contain one general exclusion not found in the other forms. In basic form DP 00 01, an exclusion eliminates coverage altogether for lawns, plants, shrubs, or trees outside of buildings. Coverage for this exposure may be added to the basic form by endorsement DP 04 17 12 02. Special dwelling form DP 00 03 contains the exclusion (B.) found in other special perils forms excluding losses due to weather conditions, acts or decisions, and faulty planning, design, or materials. But if an ensuing loss results that is not excluded, that loss is covered. The weather conditions exclusion applies only if it contributes with a cause or event excluded in exclusion A.
Automatic increase in insurance DP 04 11 12 02. This endorsement is used to provide an annual increase of 4, 6, or 8 percent in coverages A and B of the dwelling property forms.
Additional insured DP 04 41 12 02. Persons or organizations with insurable interests in the described location may be named as additional insureds on this endorsement. The additional person or organization must be listed in the schedule, with the nature of the interest listed. Such persons are entitled to receive notification if the policy cancels or is nonrenewed by the insurer.
Premises alarm or fire protection systems DP 04 70 12 02. Dwellings with approved and properly maintained installations of alarms or fire protection systems are eligible for a reduced rate. The insured must maintain the systems in working order and notify the insurer of any changes, including removal, of the system.
Building ordinance or law coverage DP 04 71 12 02. This endorsement provides additional coverage for losses resulting from ordinance or laws regulating construction, repair, or demolition of property. Coverage applies to covered dwellings, other structures, unit-owner building items, or improvements, alterations and additions. DP 04 74 12 02 may be used to add this coverage to the DP 00 01. The total percentage amount of ordinance or law coverage desired must be listed in the schedule.
Sinkhole collapse DP 04 99 07 14. This endorsement adds coverage for losses arising from the sudden settlement or collapse of earth resulting from "subterranean voids created by the action of water on limestone or similar rock formations."
Dwelling under construction DP 11 43 12 02. This endorsement can be attached when the intended occupant of the dwelling under construction is the named insured. Contractors may be added as additional insureds using endorsement DP 04 41, described above. The limit of liability for a dwelling under construction is provisional. At the time of a loss, the applicable limit is a percentage of the provisional limit, based on the proportion of actual value of the property at the time of loss. Premium is sixty-five percent of the completed value premium for owner occupied premises.
When the intended occupant of the dwelling under construction is not the named insured, this endorsement is not used. Instead, the policy declarations specify that the dwelling is under construction and permission has been granted for its completion. There is no reduction in premium. The completed value premium applies.
Functional replacement cost loss settlement DP 05 30 07 14. This endorsement may be attached to forms DP 00 02 or DP 00 03. Provided that the amount of insurance on a damaged building is at least eighty percent of the functional replacement cost immediately before the loss, loss settlement will be the lesser of the limit of liability applying to the property, or the amount necessarily spent to repair or replace using functionally equivalent methods and materials. If coverage is below the eighty percent level, then settlement will be a proportion of the total amount of insurance to eighty percent of the "functional replacement cost" of the building.
Assisted living care coverage DP 04 59 07 14. Like the homeowners 2000 program, it is now possible for an insured to extend personal property and additional living expense coverage to a related person regularly living in an assisted care living facility. Basic limits are $10,000 coverage C, and $6,000 (at $500 per month) for additional living expenses.
Limited water back-up and sump discharge or overflow DP 04 95 07 14. Coverage is provided for back-up and sump discharge or overflow if the water originates from within the dwelling on the described location and backs up through sewers and drains or overflows or is discharged from a sump, sump pump, or related equipment. Increased limits of $10,000, $15,000, $20,000, and $25,000 are available.
Owned motorized golf cart—physical loss coverage DP 05 28 07 14. Coverage may be added for physical loss to a motorized golf cart, including permanently installed accessories, equipment and parts, owned by the insured. An additional ten percent of the limit applying to the highest scheduled cart applies to accessories or equipment designed or made solely for the cart that is not permanently installed, such as a detachable golf umbrella. The vehicle must be scheduled on the endorsement with the desired limit and the make or model and serial or motor number.
Gravemarkers DP 04 58 12 02. The endorsement provides up to $5,000 coverage for gravemarkers, including mausoleums, on the described location. Losses are settled at actual cash value.
Limited Fungi, wet or dry rot, or bacteria coverage DP 04 22 07 14. This endorsement limits the amount of coverage for loss to covered real or personal property damaged by fungi (including mold), wet or dry rot, or bacteria provided the fungi, wet or dry rot, or bacteria results from a covered cause of loss. The basic amount is $10,000; the limit may be increased to $25,000 or $50,000. The limit must be listed on the declarations page.
Loss assessment DP 04 63 07 14. This endorsement provides coverage for loss assessment charged against the insured by a corporation or association of property owners. The limit must be scheduled on the endorsement. Coverage is provided as long as the assessment is the result of direct loss to the property owned by all members collectively if the damage would have been covered under the dwelling fire policy.
Windstorm or Hail percentage deductible DP 03 12 07 14. This endorsement allows an insured to add a higher windstorm or hail deductible. Available deductible percentages are 1%, 2%, 5%, 7.5%, and 10%. The location and percentage amount must be scheduled and the deductible applies to the greater of Coverage A, B, C, D or E when the dollar amount of the selected percentage deductible exceeds the amount of the All Other Perils deductible.
Earthquake DP 04 69 07 14. Earthquake coverage may be added to the policy using this endorsement. The same limit applies to all coverages within the policy. An exclusion for masonry is included in the endorsement, but it may be removed. A percentage deductible is added to Coverages A and C of 5%, 10%, 15%, 20%, and 25%.
Includes copyrighted material of Insurance Services Office, Inc., with its permission.
Original June 2014
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.