4.5 Dwelling Coverages A Through E, Endorsements and Florida Practice
Key Takeaways
- Dwelling Coverage D is fair rental value and Coverage E is additional living expense, and the ALE coverage is automatic only in the DP-2 and DP-3 forms.
- Dwelling policies include no automatic Section II liability and no personal property theft coverage; these are added through endorsements such as the DL 24 01 personal liability endorsement and broad or limited theft coverage.
- Coverage B is 10 percent of Coverage A as an additional amount under the DP-2 and DP-3 but is included within the Coverage A limit under the DP-1.
- Standard dwelling forms suspend vandalism and malicious mischief coverage once a dwelling has been vacant beyond the stated period, commonly 60 consecutive days, so the vacant versus unoccupied distinction decides the claim.
- Florida mobile and manufactured home risks are usually valued on an actual cash value basis using guide values, and attached carports and screen rooms are commonly scheduled rather than covered by a percentage of Coverage A.
Dwelling Policy Coverage Structure (A Through E)
Unlike Homeowners policies, which package Coverages A through F into mandatory baseline amounts, the Dwelling program allows policyholders to choose specific coverage parts:
Coverage A — Dwelling
Covers the residential dwelling, additions attached to the dwelling, and building equipment and outdoor equipment used to service the premises. Does not cover land.
Coverage B — Other Structures
Covers detached appurtenant structures (garages, utility sheds, fences). Standard limit is 10% of Coverage A.
- Crucial Form Distinction: Under DP-1, using Coverage B reduces the available Coverage A limit for the same loss. Under DP-2 and DP-3, Coverage B is an additional amount of insurance.
Coverage C — Personal Property
Covers personal property usual to the occupancy of a dwelling, owned or used by the insured or resident family members. It can also cover property of guests or servants on premises. Off-premises worldwide coverage is limited to 10% of the Coverage C limit.
Coverage D — Fair Rental Value
Indemnifies the property owner for lost rental income when a covered peril makes the rental portion of the dwelling uninhabitable. Coverage is limited to the actual net loss of rental income less any non-continuing operational expenses (such as tenant-paid electricity or gas).
- Limit: Standard limit is 20% of Coverage A.
- Under DP-1, payments under Coverage D reduce the total Coverage A limit available for that loss. Under DP-2 and DP-3, it is an additional amount of insurance.
Coverage E — Additional Living Expense (ALE)
Reimburses the additional expenses incurred by the resident household to maintain their normal standard of living when damaged by a covered peril.
- Availability: Automatically included in DP-2 and DP-3 (at 10% of Coverage A as an additional amount of insurance).
- Under DP-1, Coverage E is completely absent unless explicitly added by endorsement.
Exam Trap: Coverage Limits under DP-1 vs. DP-2/DP-3
Exam Trap: On the Florida exam, watch for questions calculating total payouts under DP-1.
Suppose a landlord insures a rental home under a DP-1 with a Coverage A limit of $100,000. A total fire loss destroys the home ($100,000 damage), a detached shed ($10,000 damage), and results in $20,000 in lost rent (Coverage D). Candidates often add $100,000 + $10,000 + $20,000 = $130,000.
This is incorrect for DP-1! Under DP-1, Coverages B and D are not additional amounts of insurance; they are sublimits that reduce the maximum Coverage A payout. The absolute maximum recovery under DP-1 is the face amount of Coverage A ($100,000). Under a DP-2 or DP-3, however, Coverages B, D, and E are additional insurance, allowing a total recovery of $130,000.
Essential Dwelling Endorsements
Because the unendorsed Dwelling policy is purely a property contract lacking casualty protection, claims adjusters must recognize two vital endorsements:
1. Personal Liability Endorsement (DL 24 01)
Adds Section II liability protections to the Dwelling policy, structured identically to the Homeowners policy:
- Coverage L — Personal Liability: Minimum $100,000 limit per occurrence for bodily injury and property damage, plus defense costs outside the policy limit.
- Coverage M — Medical Payments to Others: Minimum $1,000 per person no-fault medical coverage for accidents occurring on the insured location or caused by personal activities within three years of injury.
2. Theft Coverage Endorsements
Because theft of contents is completely excluded under all three base DP forms, an endorsement must be attached:
- Broad Theft Coverage Endorsement: Designed for owner-occupied dwellings. Covers both on-premises and off-premises theft of personal property, including theft damage to the building. Contains sublimits similar to the Homeowners policy ($1,500 jewelry, $2,500 firearms, $2,500 silverware).
- Limited Theft Coverage Endorsement: Designed for tenant-occupied / non-owner-occupied rental dwellings. Covers on-premises theft only of personal property owned by the named insured landlord (such as landlord-provided furnishings or appliances). It provides no off-premises coverage and never covers personal property owned by the tenant.
Florida Dwelling Practice Points
Mobile Home and Manufactured Housing Risks
Florida writes an enormous volume of mobile and manufactured home business, much of it on dwelling-style forms or on the Citizens mobile home program. Adjusters should note three differences from a site-built dwelling loss:
- Valuation is normally actual cash value on the unit itself unless a replacement cost endorsement was purchased, and dealer or NADA guides — not construction cost — usually drive the pre-loss value.
- Tie-down and anchoring condition is an underwriting and mitigation issue that surfaces after wind losses; a unit that was not anchored to code may present a policy-condition or causation dispute.
- Attached structures such as carports, screen rooms and Florida rooms are commonly written on a scheduled basis, so the adjuster must read the declarations rather than assume a percentage of Coverage A.
Vacancy, Unoccupancy and Under Construction
A dwelling form is frequently the correct product precisely because the risk is not owner-occupied. Watch the vacancy condition: standard dwelling forms suspend or reduce coverage for vandalism and malicious mischief once the dwelling has been vacant beyond the stated period (typically 60 consecutive days), and glass breakage and water damage from freezing may be excluded during vacancy unless heat was maintained or the system was drained. Vacant means no occupants and no contents for use; unoccupied means furnished but nobody living there. The distinction decides the claim.
The Coverage A Percentage Structure
Unlike the homeowners forms, the dwelling forms do not grant fixed automatic percentages for every coverage. DP-2 and DP-3 grant Coverage B (Other Structures) at 10% of Coverage A and Coverage D/E at 20% and 10% respectively as an additional amount, while the DP-1 pays Coverage B as part of — not in addition to — the Coverage A limit and provides fair rental value at 20% of Coverage A with no separate ALE. Verify the edition and the declarations before quoting a percentage in a settlement letter.
Common Endorsement Requests
| Endorsement | Effect |
|---|---|
| Broad Theft Coverage | Adds on-premises and off-premises theft for an owner-occupant; a DP form provides no theft coverage without it |
| Limited Theft Coverage | Adds on-premises theft only, typically for a tenant-occupied dwelling |
| Personal Liability (DL 24 01) | Adds Section II-style liability and medical payments to a monoline dwelling policy |
| Automatic Increase in Insurance | Increases Coverage A by a stated annual percentage to track inflation |
| Ordinance or Law | Adds the increased cost of construction required by code, subject to the Florida offer rules in F.S. § 627.7011 |
| Water Back-Up and Sump Discharge | Adds a sublimit for water that backs up through sewers or drains, which the base form excludes |
A landlord purchases a theft endorsement to protect landlord-owned furnishings and laundry equipment located inside a four-unit tenant-occupied apartment building insured under a DP-2 policy. Which endorsement must the adjuster confirm is present on the policy declarations?
Which of the following physical damage perils is covered under an unendorsed DP-2 Broad Form, but strictly excluded under an unendorsed DP-1 Basic Form that has the Extended Coverage (EC) and V&MM endorsements attached?