California Property & Casualty Broker-AgentProperty InsuranceEasy
A client owns a rental property insured under a Dwelling Policy (DP-3). A tenant accidentally leaves a stove burner on, causing a small kitchen fire that results in $15,000 in damage to the dwelling. Which of the following statements about coverage for this loss is accurate?
- AThe DP-3 policy will only cover the structural damage, but not any personal property of the tenant.
- BThe loss will only be covered if the tenant has their own Renter's Insurance policy.
- CThe loss is excluded because tenant negligence is not a covered peril under any DP form.
- DThe DP-3 policy will cover the damage because fire is a named peril under DP-1 and DP-2, and DP-3 covers all perils not specifically excluded.
Show answer & explanationAnswer & explanation
Correct answer: D. The DP-3 policy will cover the damage because fire is a named peril under DP-1 and DP-2, and DP-3 covers all perils not specifically excluded.
DP-3 policies provide 'open perils' coverage for the dwelling, meaning all perils are covered unless specifically excluded. Fire is a fundamental peril covered by all dwelling forms and is not typically excluded.
Why the other options are wrong
- A. While the DP-3 covers the dwelling, it does not cover the tenant's personal property, which is true, but the question is about the dwelling damage coverage.
- B. The landlord's DP-3 policy covers damage to the dwelling regardless of the tenant's insurance.
- C. Tenant negligence does not automatically exclude coverage for otherwise covered perils like fire under a DP-3.
DP-3 Perils
The Dwelling Policy Special Form (DP-3) provides open perils coverage for the dwelling and other structures, meaning it covers all perils of direct physical loss not specifically excluded in the policy.
- Open perils coverage for Coverage A (Dwelling) and B (Other Structures).
- Named perils coverage for Coverage C (Personal Property).
- Broader coverage than DP-1 or DP-2.
Memory trick: DP-3 covers all, unless it's on the exclusion wall.