Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Property InsuranceEasy
A client has a Dwelling Policy (DP-1 Basic Form) covering their rental property. A tenant accidentally starts a small fire in the kitchen, causing $5,000 in damage to the structure. The policy has a Coverage A limit of $150,000 and a $1,000 deductible. How much will the DP-1 policy pay for this loss?
- A$5,000
- B$0, because tenant-caused damage is excluded.
- C$4,000
- D$149,000
Show answer & explanationAnswer & explanation
Correct answer: C. $4,000
The DP-1 Basic Form covers fire as a named peril. The loss amount is $5,000. After applying the $1,000 deductible, the policy will pay $4,000.
Why the other options are wrong
- A. This does not account for the deductible.
- B. This is incorrect; fire is a covered peril in DP-1, and the cause being a tenant's accidental act does not exclude it.
- D. This is an incorrect calculation and limit application.
DP-1 Basic Form Perils
The Dwelling Policy (DP-1 Basic Form) is a named perils policy, typically covering Fire, Lightning, and Internal Explosion. Extended Coverage perils can be added by endorsement.
- Named perils coverage.
- Covers Fire, Lightning, Internal Explosion.
- Deductible applies per occurrence.
Memory trick: Fire, Lightning, Explosion - subtract the deductible, no confusion.