An insured has a DP-3 Special Form Dwelling Policy. During a severe thunderstorm, a tree from a neighboring property falls and damages the insured's detached garage. The garage is valued at $20,000. How would the DP-3 policy likely respond to this loss, assuming no deductible is mentioned?
- AThe loss would be covered under Coverage A (Dwelling) with a special limit of 10% of the Coverage A amount.
- BThe loss would be covered under Coverage B (Other Structures) for the full $20,000, as it's an open perils policy.
- CThe loss would be covered only if the tree was first struck by lightning, as falling objects are not a covered peril for other structures.
- DThe loss would be denied because the tree originated from a neighbor's property.
Show answer & explanationAnswer & explanation
Correct answer: B. The loss would be covered under Coverage B (Other Structures) for the full $20,000, as it's an open perils policy.
Under a DP-3, Coverage B (Other Structures) provides 'open perils' coverage, similar to Coverage A. A falling tree, regardless of its origin, is a direct physical loss and would be covered, up to the Coverage B limit (typically 10% of Coverage A), but the question implies the garage is valued within that limit, so it would be paid for the full $20,000.
Why the other options are wrong
- A. Coverage A is for the main dwelling. Coverage B is for other structures and typically has its own limit (e.g., 10% of Coverage A), but the loss is paid from Coverage B, not A.
- C. This statement describes a named peril (falling objects) and a condition for coverage often found in more restrictive dwelling forms (DP-1 or DP-2 for certain perils), not the 'open perils' of DP-3 for Coverage B.
- D. The origin of the tree (neighbor's property) does not exclude coverage under 'open perils' for direct physical loss to the insured's property.
DP-3 Coverage B (Other Structures)
Under a DP-3 Special Form Dwelling Policy, Coverage B provides 'open perils' (all-risk) coverage for structures on the insured premises that are separated from the dwelling by clear space or connected only by a fence, utility line, or similar connection.
- Typically 10% of Coverage A amount.
- Covers detached garages, sheds, gazebos, etc.
- Provides broad 'open perils' coverage, similar to Coverage A.
Memory trick: DP-3's Coverage B is like a mini-dwelling policy for your detached stuff, with all-risk protection.