Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Property InsuranceMedium
A client has a Dwelling Policy (DP-3 Special Form) covering their rental property. A tenant intentionally vandalizes the interior of the dwelling, causing $10,000 in damage. The tenant is subsequently evicted. Which of the following statements is TRUE regarding coverage for this loss?
- AThe loss is fully covered under the DP-3 Special Form, as it covers all perils not specifically excluded.
- BOnly vandalism caused by unknown persons, not tenants, is covered under DP-3.
- CThe DP-3 Special Form excludes vandalism entirely, regardless of who causes it.
- DVandalism is covered, but damage caused by a tenant is specifically excluded under DP-3.
Show answer & explanationAnswer & explanation
Correct answer: D. Vandalism is covered, but damage caused by a tenant is specifically excluded under DP-3.
While vandalism is typically a covered peril under the DP-3 Special Form, damage caused by a tenant is a common exclusion. Policies often exclude damage caused by an insured, or any tenant of the insured, to prevent moral hazard.
Why the other options are wrong
- A. This is incorrect; even 'all-risk' policies like DP-3 have exclusions, and tenant damage is a common one.
- B. While true that vandalism by unknown persons is covered, the key here is the specific exclusion for tenant damage.
- C. This is incorrect; vandalism is generally a covered peril under DP-3, just not when caused by a tenant.
DP-3 Tenant Damage Exclusion
The DP-3 Special Form generally covers vandalism, but commonly includes an exclusion for damage caused by a tenant of the insured.
- DP-3 is an 'all-risk' policy for the dwelling, covering perils not specifically excluded.
- Vandalism and malicious mischief are typically covered perils.
- Exclusions often include intentional acts by the insured, or damage caused by tenants, to prevent moral hazard.
Memory trick: DP-3 covers Vandalism, but not when the 'T'enant is the culprit.