Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Property InsuranceEasy
A client has a Dwelling Policy (DP-3 Special Form) covering their rental property. A tenant accidentally leaves a stove burner on, causing a small fire that damages the kitchen cabinets and a portion of the wall. Which of the following statements accurately describes how this loss would be covered?
- AThe loss is covered under Fair Rental Value (Coverage D) as the property is uninhabitable.
- BThe DP-3 Special Form covers direct physical loss to the dwelling unless specifically excluded, so the fire damage is covered.
- COnly the tenant's renters insurance policy would cover this damage, as it was their negligence.
- DThe loss is excluded because it was caused by a tenant's negligence.
Show answer & explanationAnswer & explanation
Correct answer: B. The DP-3 Special Form covers direct physical loss to the dwelling unless specifically excluded, so the fire damage is covered.
The DP-3 Special Form provides open perils coverage for the dwelling, meaning it covers all direct physical losses unless specifically excluded. Fire is a covered peril, and tenant negligence is not a standard exclusion for direct physical damage to the dwelling.
Why the other options are wrong
- A. Fair Rental Value (Coverage D) covers loss of rental income, not the physical damage to the property.
- C. The tenant's renters policy (HO-4) covers their personal property and liability, not the dwelling structure itself.
- D. Tenant negligence is not a standard exclusion for direct physical damage to the dwelling under a DP-3.
DP-3 Special Form Coverage
A Dwelling Policy form providing 'open perils' coverage for the dwelling and other structures, meaning it covers all direct physical losses unless specifically excluded. Personal property (Coverage C) is covered on a named perils basis.
- Dwelling (Coverage A) and Other Structures (Coverage B) are 'open perils'.
- Personal Property (Coverage C) is 'named perils'.
- Common exclusions include flood, earthquake, war, nuclear hazard, and wear and tear.
Memory trick: DP-3 is Open for Dwelling, Named for Stuff.