Dwelling Property Categories, Loss of Use and Extensions

Dwelling Property Categories, Loss of Use and Extensions

The ISO Dwelling Property Program organizes coverage into five standardized divisions, designated by the letters A through E. Understanding the boundaries, sub-limits, extensions, and operational differences between forms for each coverage division is essential for property adjusters scoping losses on rental, seasonal, and private residential structures.

Coverage A: Dwelling

Coverage A (Dwelling) provides direct physical loss protection for the primary residential building described on the declarations page:

• Covered Property: The dwelling structure itself, including all attached additions, extensions, built-in cabinetry, permanently installed HVAC equipment, attached garages, breezeways, decks, and exterior porches.
• Construction & Repair Materials: Coverage A extends to building materials, lumber, and supplies located on or adjacent to the described premises that are intended for use in the construction, alteration, or repair of the dwelling or other structures.
• Outdoor Equipment: Permanently installed outdoor equipment and apparatus used to service the premises (such as outdoor heat pumps, attached exterior lighting, or permanently installed whole-house backup generators) are covered under Coverage A.
• Express Exclusion: Coverage A strictly excludes land, including the land on which the dwelling is situated, underground water, and excavations.

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Coverage B: Other Structures

Coverage B (Other Structures) covers detached appurtenant structures located on the described premises:

• Eligible Structures: Detached two-car garages, storage sheds, gazebos, swimming pools, detached fences, masonry property walls, and driveways.
• Separation Requirement: The structure must be separated from the primary dwelling by clear space, or connected solely by an unattached fence, utility line, or exterior walkway. If a garage is connected to the dwelling by an enclosed, fully roofed breezeway, it is classified as an attached structure and insured under Coverage A.
• Use Restrictions:
  1. Coverage B does not cover any structure used in whole or in part for commercial, manufacturing, or farming purposes.
  2. Coverage B does not cover any structure rented or held for rental to any person other than a tenant of the primary dwelling, unless the structure is rented solely as a private garage.
• Form Differences in Limit Application:
  • Under DP-1, the Coverage B limit is automatically 10% of the Coverage A limit, but it is not an additional amount of insurance. Any claim paid under Coverage B reduces the remaining Coverage A limit available for a simultaneous loss. For example, if a DP-1 policy provides $100,000 under Coverage A and a catastrophic fire destroys both the dwelling ($100,000 loss) and a detached garage ($10,000 loss), the total maximum recovery across both structures is strictly capped at $100,000.
  • Under DP-2 and DP-3, Coverage B automatically provides 10% of Coverage A as an additional amount of insurance. Under the same scenario with $100,000 on Coverage A, the insurer pays up to $100,000 for the dwelling plus up to $10,000 for the detached garage, providing $110,000 in total available protection.

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Coverage C: Personal Property (Contents)

Coverage C (Personal Property) insures household goods, furniture, clothing, appliances, and personal belongings usual to the occupancy of a residential dwelling:

• Ownership Scope: Covers property owned or used by the named insured and resident family members. At the insured's option, coverage may be extended to personal property of guests or domestic servants while on the premises.
• Worldwide Coverage Extension: The insured may apply up to 10% of the Coverage C limit to cover personal property anywhere in the world (such as clothing packed in luggage during travel, or personal effects at a professional laundry facility). On DP-1, this worldwide extension is not additional insurance; on DP-2 and DP-3, it is part of, and not in addition to, the Coverage C limit.
• Property Strictly Excluded from Coverage C:
  • Accounts, bank notes, bills, bullion, coins, currency, deeds, evidences of debt, gold, silver, passports, personal records, and securities.
  • Animals, birds, or fish.
  • Aircraft and aerial devices, including parts and equipment.
  • Motor vehicles and motorized land conveyances, including parts, equipment, and accessories. (Coverage C does cover motorized equipment not licensed for road use and used solely to service the premises, such as riding lawn mowers, snowblowers, or motorized wheelchairs for persons with physical disabilities).
  • Watercraft, other than rowboats and canoes (which are covered only while on the described premises).
  • Data stored on computers or magnetic media.
  • Outdoor grave markers and mausoleums.

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Coverage D: Fair Rental Value & Coverage E: Additional Living Expense

Coverages D and E provide vital indirect (consequential) loss protections when a covered direct physical loss makes the property uninhabitable.

Coverage D: Fair Rental Value

Coverage D protects the policyholder against lost rental income when a covered peril renders the rented portion of the dwelling untenantable:

• Measure of Recovery: Pays the fair rental value of the rented premises, less any operating expenses that do not continue while the property is uninhabitable (such as landlord-paid electricity, gas, or janitorial services).
• Payment Duration: Payout continues only for the reasonable time required to repair or rebuild the damaged premises, or if the tenant permanently relocates, the time required to restore the unit to tenantable condition.
• Form Limits:
  • Under DP-1, Coverage D provides up to 20% of Coverage A (payable at not more than 1/12th of that amount for each month the structure is untenantable), but this payout is not an additional amount of insurance and reduces the total Coverage A limit.
  • Under DP-2 and DP-3, Coverage D provides up to 20% of Coverage A as an additional amount of insurance.

Coverage E: Additional Living Expense

Coverage E compensates owner-occupants (or tenant-occupants who carry Coverage C) for the necessary increase in living expenses incurred to maintain the household's normal standard of living while displaced by a covered loss:

• Eligible Expenses: Hotel or short-term apartment rent, restaurant dining expenses exceeding normal grocery bills, pet boarding, additional transportation mileage, and temporary storage fees.
• Crucial Form Distinction:
  • DP-1: Standard unendorsed DP-1 policies do not include Coverage E. If an owner-occupant on a DP-1 is displaced by fire, the policy pays zero living expenses unless the insured specifically purchased the Additional Living Expense Endorsement (DP 04 14).
  • DP-2 and DP-3: Coverage E is automatically included for owner-occupants. On DP-2 and DP-3, Coverages D and E share a combined maximum limit of up to 20% of Coverage A as an additional amount of insurance.

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Comparative Summary: Coverages A Through E

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Automatic Other Coverages and Provisions

Dwelling forms include several built-in extensions and supplementary coverages:

• Debris Removal: Pays reasonable expenses to remove debris of covered property damaged by an insured peril. In DP-1, it is contained within the applicable policy limit. Under the illustrated DP forms, debris removal uses the limit applicable to the damaged property. Do not import an automatic homeowners/commercial additional-5% benefit into a dwelling form that does not provide it.
• Reasonable Repairs / Temporary Measures: Reimburses the insured for reasonable costs incurred for temporary measures taken to protect covered property against further damage following an insured loss (such as tarping a damaged roof or boarding broken windows).
• Fire Department Service Charge: Provides up to $500 for charges incurred when a municipal or rural fire department is summoned to save or protect covered property from an insured peril, provided the property is not located within the fire department's tax-supported district. This coverage is an additional amount of insurance, and no deductible applies.
• Trees, Shrubs, and Other Plants: Available only under DP-2 and DP-3. Covers outdoor trees, shrubs, plants, and lawns on the described premises against specific named perils: Fire, Lightning, Explosion, Riot/Civil Commotion, Aircraft, Non-resident Vehicles, and Vandalism.
  • Limitations: The total limit is 5% of Coverage A, with a strict sub-limit of no more than $500 for any one tree, shrub, or plant.
  • Exam Trap: Trees, shrubs, and plants are never covered for windstorm, hail, or the weight of ice, snow, or sleet.
• Property Removed: Provides open-peril protection for covered property removed from the premises to preserve it from imminent damage by an insured peril. The property is covered at any temporary location for up to 5 days under DP-1 and up to 30 days under DP-2 and DP-3.
• Glass or Safety Glazing Material: Covers the breakage of glass that is part of a covered building. Under DP-2 and DP-3, coverage is excluded if the dwelling has been vacant for more than 60 consecutive days prior to the loss.
• Ordinance or Law: Under DP-2 and DP-3, the policyholder may apply up to 10% of the Coverage A limit as an additional amount of insurance to pay for the increased costs of construction, demolition, or remodeling resulting from the enforcement of local building codes or ordinances following a covered loss.

Applying D and E together

Under the illustrated broad/special dwelling form, fair rental value and additional living expense use a combined amount of 20% of Coverage A, not two separately cumulative 20% limits or an automatic additional 10% E limit. Read purchased limits and state amendments. A landlord's lost net rent and an owner-occupant's increased living expenses are different exposures; select the benefit appropriate to the actual occupancy and avoid paying saved expenses or the same loss twice.