California Property & Casualty Broker-AgentProperty InsuranceEasy
An insured has a Dwelling Policy (DP-3) on their rental property. A tenant accidentally leaves a stove burner on, causing a small fire that damages the kitchen. Which of the following statements regarding coverage for this loss is most accurate?
- AThe DP-3 policy will cover the damage, but only up to 10% of Coverage A due to tenant involvement.
- BThe DP-3 policy will cover the fire damage to the dwelling as it is a covered peril.
- CThe DP-3 policy will only cover the damage if an endorsement for tenant negligence is added.
- DThe DP-3 policy will not cover the damage because it was caused by a tenant's negligence.
Show answer & explanationAnswer & explanation
Correct answer: B. The DP-3 policy will cover the fire damage to the dwelling as it is a covered peril.
A DP-3 (Special Form Dwelling Policy) covers fire as a named peril. The cause of the fire, even if due to a tenant's negligence, does not typically exclude coverage for the dwelling structure itself.
Why the other options are wrong
- A. There is no 10% limitation on fire damage due to tenant involvement under a DP-3 policy.
- C. No specific endorsement for tenant negligence is required for a covered peril like fire.
- D. Tenant negligence does not negate coverage for a covered peril like fire in a DP-3.
DP-3 Perils
The DP-3 (Special Form) Dwelling Policy provides open perils coverage for the dwelling and other structures, meaning it covers all causes of loss unless specifically excluded.
- Open perils for Coverage A & B
- Named perils for Coverage C (personal property)
- Fire is always a covered peril
Memory trick: DP-3: Dwelling Protected from ALL but Exclusions