Chapter 4-Dwelling Policy

Question 1

ACCIDENTAL DISCHARGE OR OVERFLOW OF WATER OR STEAM

Answer 1

Must occur from within a plumbing, heating, air conditioning, or automatic fire protective sprinkler system, or household appliance. This doesn’t apply to constant or repeated seepage or leakage over a period of time or if the dwelling was vacant 60 or more consecutive days immediately before a loss

4.1

Question 2

ACTUAL CASH VALUE

Answer 2

Losses to the DP–1 dwelling, other structures, and contents are paid on an actual cash value basis to the insured.

4.1

Question 3

AUTOMATIC INCREASE IN INSURANCE ENDORSEMENT

Answer 3

t is used to provide, at the annual renewal date of the policy, an automatic increase in the Coverage A and B limits of insurance to help offset inflation.

4.5

Question 4

BROAD THEFT COVERAGE ENDORSEMENT

Because none of the dwelling forms include theft coverage, one of two endorsements must be used if the named insured wishes to have coverage for the peril of theft. The Broad Theft Coverage endorsement may be added to any of the dwelling forms IF the described location is owner occupied. If the dwelling is tenant occupied, the Limited Theft Coverage endorsement must be used

Answer 4

Broad Theft Coverage – Provides insurance for the perils of theft, attempted theft, and vandalism or malicious mischief that results from theft or attempted theft.

• No VMM coverage applies if the dwelling was vacant from more than 60 consecutive days immediately before the loss
• On-premises coverage is provided for covered property located at the described location occupied by an insured
• Off-premises coverage is provided when covered property is away from the described location; however, the property must be owned or used by an insured or residence employee

Limited Theft Coverage – Provides insurance for the perils of theft, attempted theft, and vandalism or malicious mischief that results from theft or attempted theft.

• No VMM coverage applies if the dwelling was vacant from more than 60 consecutive days immediately before the loss
• On-premises coverage applies when covered property is owned or used by the named insured or a residence employee and is at the described location

4.5

Question 5

COLLAPSE

Answer 5

“Collapse” is defined as the abrupt falling down or caving in of a building, or any portion of a building, but only if it cannot be occupied for its current intended purpose. If a building, or any portion of a building, is in danger of falling down or caving in — or if it’s standing, it is NOT in a state of collapse.

Under the DP–2 and DP–3 forms, coverage is provided for direct physical loss to covered property involving collapse of a building, or any part of a building, but only if the cause of loss is: any of the Coverage C named perils; hidden decay; hidden insect or vermin damage; weight of contents, equipment, animals or people; weight of rain which collects on the roof; and use of defective materials or methods in construction, remodeling or renovation if the collapse occurs during the course of the construction, remodeling, or renovation.

Collapse does not include settling, cracking, shrinking, bulging, or expansion. This coverage does not increase the limit of insurance and is NOT provided by the DP–1.

4.3

Question 6

COVERAGE A

DWELLING

Answer 6

applies to the dwelling described in the declarations, used principally for residential purposes, including structures attached to the dwelling, such as an attached garage, carport, breezeway or deck.

I.E. Dwelling,

• Insures:
  
  • The dwelling and attached structures
  • Materials and supplies to construct or repair
  • Building and outdoor equipment
  • NO coverage for land

4.2

Question 7

COVERAGE B

OTHER STRUCTURES

Answer 7

applies to other structures on the described location if they are separated or detached from the dwelling by clear space, a fence, or a utility line.

I.E. Other Structures

• Insures:
  
  • Other structures NOT attached to the dwelling
  • NO coverage for structures rented to others
  • NO coverage for land
• Insurance limit is up to 10% of Coverage A
  
  • DP1 doesn’t increase Coverage A limit
  • DP2 & DP3 this is additional insurance

4.2

Question 8

Coverage B

LIMIT OF INSURANCE

Answer 8

is up to 10% of the Coverage A limit and is automatically provided under each of the dwelling forms.

4.2

Question 9

COVERAGE C

PERSONAL PROPERTY

Answer 9

applies to household and personal property usual to the occupancy as a dwelling if it is owned by the insured or by members of the insured’s family who reside with the insured.

I.E. Personal Property

• Insures:
  
  • Personal property usual to a dwelling occupancy AND owned or used by an insured or resident relative AND while on the premises
  • At insured’s request, personal property owned by a guest or servant while on the premises
• NOT covered
  
  • Accounts, bank notes, bills, coins, and currency
  • Birds, animals, or fish
  • Aircraft, hovercraft and watercraft
  • Motor vehicles, but are covered if not registered but used in the premises
  • Data Credit cards, electronic fund transfer cards, etc.
  • Water or steam
  • Grave markers
• coverage is limited to 10 or $1,000, whichever is greater

4.2

Question 10

COVERAGE D

FAIR RENTAL VALUE

Answer 10

provides insurance for indirect losses that occur as a result of direct losses to property insured under Coverages A, B, or C that are covered by the policy.

4. 2
5. The Coverage D limit of insurance is up to 20% of the Coverage A limit and is automatically provided under each of the dwelling forms.

I.E. Fair Rental Value

• Insures
  
  • Loss in rental value sustained by insured if covered loss under Coverage A, B, or C makes dwelling not fit for normal use
  • Does not include continuing expenses
• Insurance limit is up to 20% of Coverage A
  
  • DP1 doesn’t increase Coverage A limit
  • DP2 & DP3 this is additional insurance

4.2

Question 11

COVERAGE E

ADDITIONAL LIVING EXPENSES

Answer 11

Only provided by the DP2 & DP3 forms, not the DP1

I.E. Additional Living Expenses

Question 12

DAMAGE BY BURLARS

Answer 12

This does not include theft coverage nor does it apply if the dwelling was vacant 60 or more consecutive days immediately before a loss

Question 13

DEBRIS REMOVAL

Answer 13

pays the insured’s reasonable expenses for the removal of debris of covered property if the property is damaged by an insured peril.

4.3

Question 14

DP-1 BASIC FORM

Answer 14

perils are fire or lightning and internal explosion. If an additional premium is paid for Extended Coverage (EC), the following perils are also included: windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, and volcanic eruption. The peril of vandalism or malicious mischief (VMM) may also be included with the payment of an additional premium.

VMM excluded if dwelling was vacant for 60+ days

Example: A fire breaks out in the kitchen of the insured property. After proof of loss, the insurer pays the actual cash value for damages to the dwelling.

Coverage B limit does not increase the amount of insurance

4.1

Question 15

DP-2 BROAD FORM

Answer 15

perils are the DP–1 perils, the EC perils, VMM, AND NOW PLUS the following: damage by burglars, falling objects, weight of ice, snow, or sleet, and accidental discharge or overflow of water or steam.

Example: While the insured property was unoccupied, it was burglarized. The insurer pays to replace the broken window the burglar used for entry, but not for the personal property stolen

4.1

Question 16

DP-3 SPECIAL FORM

Answer 16

covers the dwelling and other structures on an open perils basis, except for the perils specifically excluded.

Example: After an ice storm, the pool on the insured property was damaged. The insurer pays the claim on a replacement cost basis.

Coverage B (Additional Structures) is additional insurance

4.1

Question 17

DP1 w/Extended Coverage

Answer 17

Example: The insured property was damaged when someone drove into the garage. After proof of loss, the insurer pays the actual cash value for damages to the dwelling.

4.1

Question 18

DWELLING PROPERTY PROGRAM

Answer 18

dwellings must be used principally for residential purposes, cannot contain more than 4 dwelling units, and can have no more than 5 roomers or boarders.

Can be owner occupied or tenant occupied or seasonal or secondary dwellings

Mobile homes must be permanently affixed to a foundation with only the basic form of coverage DP-1

4.1

Question 19

DWELLING UNDER CONSTRUCTION ENDORSEMENT

Answer 19

This endorsement is needed because eligibility for the dwelling property coverage requires insured dwellings to be occupied for residential purposes. Dwellings under construction are not occupied and, when this endorsement is added, the named insured agrees to advise the insurer when construction is completed.The limit of liability for Coverage A is provisional and is based on the building’s value upon completion. The limit of insurance in place at any time prior to completion is a percentage of the Coverage A limit that equals the proportion the actual value bears to the value on the date of completion.Once the construction is completed, the named insured must notify the insurer to obtain consent to occupy the dwelling and to adjust the policy premium. Occupancy of the building under Coverage A, as a dwelling, is permitted for 30 days after completion.

Question 20

EARTH MOVEMENT

Answer 20

Earthquake, including land shock waves or tremors before, during or after a volcanic eruption; landslide; mudslide or mudflow; subsidence or sinkhole, earth sinking, rising, or shifting. Coverage is excluded whether the earth movement is caused by human, animal, or natural forces. If a direct loss by fire or explosion ensues from earth movement, it is covered.

4.4

Question 21

FALLING OBJECTS

Answer 21

Damage to the exterior of the building must take place for coverage to apply to contents inside the building

4.1

Question 22

FIRE DEPARTMENT SERVICE CHARGE

Answer 22

Under each of the dwelling forms, the policy will pay up to $500 for the named insured’s liability assumed by contract or agreement for fire department charges incurred when the fire department is called to save or protect covered property from an insured peril.

Coverage does not apply if the property is located within the limits of the city, municipality, or protection district furnishing the fire department response. Essentially, coverage is provided for services provided by an assisting fire department. This is additional insurance and the policy deductible does not apply.

4.3

Question 23

FREEZING

Answer 23

Must occur to a plumbing, heating, air conditioning, or automatic fire protective sprinkler system, or household appliance. Applies only if the insured used reasonable care to maintain heat in the building OR shut off the water supply and drained all systems of water

Question 24

GENERAL EXCLUSIONS

Answer 24

The dwelling forms do not insure for loss caused directly or indirectly by any of the following — regardless of any other cause or event that contributes concurrently or in any sequence to the loss:

Earth Movement

Water Damage

Power Failure

Neglect

War

Nuclear Hazard

Intentional Loss

Non-concurrent Exclusions

Ordinance of Law

Question 25

IMPROVEMENTS, ALTERATIONS, AND ADDITIONS

Answer 25

If the insured is a tenant, he or she may use up to 10% of the Coverage C limit of insurance for a covered loss to improvements, alterations, and additions made or acquired at the insured’s expense to that part of the described location only occupied by the named insured.

In the DP–1 form, coverage is included in the limit of insurance;

in the DP–2 and DP–3 forms, it’s additional insurance.

4.3

Question 26

coverage A

LIMIT OF INSURANCE

Answer 26

appears on the declarations as a specific limit. It is chosen by the named insured at the time coverage is applied for and should represent the dwelling’s replacement value.

4.2

Question 27

NEGLECT

Answer 27

excluded and is defined as the insured’s neglect to use all reasonable means to save and preserve property at and after the time of a loss.

4.4

Question 28

ORDINANCE OR LAW

Answer 28

This is an additional coverage for DP-2 and DP-3. It applies to increased costs incurred by the named insured due to the enforcement of any ordinance or law that requires or regulates the construction, demolition, remodeling, renovation, or repair of a covered building or structure because of a covered loss.

Up to 10% of the Coverage A limit of liability may be used for this coverage and, if the insured is a tenant, up to 10% of the limit of insurance that applies to improvements, alterations, and additions may be used. Some or all of the limit of insurance for this coverage may be used to pay for the increased costs incurred by the named insured to remove debris resulting from the construction, demolition, remodeling, renovation, repair, or replacement of covered property.

This is additional insurance, and NO coverage is provided for any loss in value of a building or structure due to the enforcement of any ordinance or law or costs incurred by ordinances that require pollution clean up, removal, treatment, etc.

4.3

Question 29

PERSONAL LIABILITY SUPPLEMENT

Answer 29

Because the dwelling forms only provide property coverage, if personal liability coverage is desired, coverage must be secured under another policy or an endorsement must be attached to the dwelling policy. The Personal Liability endorsement contains its own Definitions section and provides Coverage L - Personal Liability and Coverage M - Medical Payments to Others. The standard limit for Coverage L is $100,000 per occurrence, and the standard limit for Coverage M is $1,000 per person.Personal liability coverage applies to claims made or suits brought against an insured for damages because of bodily injury or property damage caused by an occurrence to which the policy applies. Payment will be made up to the limit of liability appearing on the declarations for which an insured is legally liable. Coverage is also provided for defense in addition to the limits of liability.Medical Payments to Others coverage applies to claims for the necessary medical expenses incurred or medically ascertained within 3 years from the date of an accident causing bodily injury to which the policy applies.

• Medical expenses are reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, and funeral services
• Coverage does NOT apply to expenses incurred by the named insured or regular residents of the named insured’s household, except for residence employees
• Coverage applying to others must arise out of injury to a person on an insured location with the insured’s permission, or to persons off an insured location if the injury is caused by the activities of an insured or residence employee while in the course of employment by the insured. Also covered are injuries to persons caused by an animal owned by, or in the care of, an insured; or that arise out of conditions on an insured location or ways immediately adjoining it.

provides coverage for personal liability and medical payments to others and may be added to any of the dwelling forms of coverage.

4.5

Question 30

POWER FAILURE

Answer 30

is excluded and is the failure of power or other utility service if it takes place off the described location. Power failure occurring on the described location is covered.

4.4

Question 31

PROPERTY REMOVED

Answer 31

If property is being removed from the described location to protect it because it is endangered by a covered peril, coverage is provided for direct loss by any peril while removed.

Under the DP–1 form, coverage is provided for 5 days while removed;

under the DP–2 and DP–3 forms, coverage is provided for 30 days while removed. This coverage does not increase the limit of insurance that applies to the property being removed.

4.3

Question 32

REASONABLE REPAIRS

Answer 32

If covered property is damaged by an insured peril, the policy will pay the reasonable costs incurred by the named insured for necessary measures taken to protect covered property from further damage.

This is not additional insurance and coverage does not increase the limit of insurance that applies to the covered property.

4.3

Question 33

SUDDEN AND ACCIDENTAL DAMAGE FROM ARTIFICIALLY GENERATED ELECTRICAL CURRENT

Answer 33

This peril is caused by man-made electricity or power surge and does NOT apply to damage to tubes, transistors, electronic components, or circuitry contained in appliances, fixtures, computers, etc.

Question 34

SUDDEN AND ACCIDENTAL TEARING APART, CRACKING, BURNING, OR BULGING

Answer 34

Must occur to a steam or hot water heating system, air conditioning system, or automatic fire protective system, or household appliance

4.1

Question 35

TREES, SHRUBS, AND OTHER PLANTS

Answer 35

Under the DP–2 and DP–3 forms, coverage is provided for trees, shrubs, plants or lawns on the described location for loss caused by the following perils: fire or lightning; explosion; riot or civil commotion; aircraft; vehicles not owned by the named insured or by a resident of the described location; vandalism or malicious mischief; and damage caused during a burglary or an attempted burglary.

This coverage is not included in the DP–1 form.

Damage to trees, shrubs, plants, or lawns caused by the following perils are not covered: wind; hail; weight of snow, ice or sleet; and loss by theft.

The limit of insurance for this coverage is up to 5% of the Coverage A limit, with a maximum of $500 applying to any one tree, shrub, or plant. This is additional coverage.

4.3

Question 36

WAR, NUCLER HAZARD, AND INTENTIONAL LOSS

Answer 36

excluded and is defined as the insured’s neglect to use all reasonable means to save and preserve property at and after the time of a loss.

4.4

Question 37

WATER DAMAGE

Answer 37

Flood, surface water waves, tidal water, overflow of a body of water, water or waterborne material that backs up through sewers or drains or overflows from a sump or sump pump, water or waterborne material below the surface of the ground — including water that exerts pressure on or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool, or other structure (such as basement walls). If a direct loss by fire or explosion results from water damage, it is covered.

4.4

Question 38

WEIGHT OF ICE, SNOW, OR SLEET

Answer 38

This doesn’t apply to awnings, patios, pavements, pools, etc.

4.1

Question 39

WORLDWIDE COVERAGE

Answer 39

The insured may use up to 10% of the Coverage C limit of liability for a covered loss to property insured under Coverage C while it’s located anywhere in the world. This coverage does NOT apply to rowboats, canoes, or property owned by guests or servants. It is included in the Coverage C limit of liability.

4.3