1.4 Policy Structure: Declarations, Insuring Agreement, Conditions, Exclusions

The DICE Framework

Almost every ISO-standard policy is organized into four components. Remember the acronym DICE:

Exam tactic: On any coverage question, mentally walk DICE in order — Is the peril in the insuring agreement? Is the property/limit on the dec page? Does an exclusion apply? Are the conditions met?

Named-Peril vs. Open-Peril (All-Risk)

How the insuring agreement is written determines the burden of proof:

• Named-peril (specified-peril) forms list the covered perils. Only those perils are covered, and the insured must prove the loss was caused by a listed peril. Examples: DP-1 (Basic), HO-2 (Broad), ISO CP Basic/Broad causes-of-loss forms.
• Open-peril (all-risk / special) forms cover all direct physical loss except what is excluded. The insurer must prove an exclusion applies to deny. Examples: HO-3 (open peril on dwelling, named peril on contents), HO-5 (open peril on both), ISO CP Special (CP 10 30).

Trap: "All-risk" does not mean "everything is covered." It means everything except the exclusions — and there are always exclusions.

Reading the DICE Framework in Practice

A useful memory aid for policy structure is DICE: Declarations, Insuring agreement, Conditions, Exclusions. Each part answers a different question on the exam:

Exam tip: Coverage is granted by the insuring agreement, limited by exclusions, and qualified by conditions; an endorsement can add back excluded perils (e.g., scheduling jewelry) or remove coverage. When a question gives a fact pattern, identify which DICE component controls the outcome - most disputes turn on an exclusion or an unmet condition. Definitions, often a fifth labeled section, control the meaning of bolded terms throughout the contract.

Conditions and Endorsements

The Conditions section sets the procedural rules both parties must follow. Frequently tested conditions include:

• Duties after loss — give prompt notice, protect property from further damage, submit a sworn proof of loss (often within 60 days), cooperate and submit to examination under oath.
• Appraisal — if the insured and insurer disagree on the amount (not coverage), each names an appraiser; the two select an umpire and any two of the three set the value.
• Cancellation/Nonrenewal — notice periods (commonly 10 days for nonpayment, 30+ days for other reasons) vary by state.
• Mortgage clause — protects a lender's interest even if the insured's own claim is denied.

Endorsements (a.k.a. riders) add, delete, or modify coverage. When an endorsement conflicts with the base form, the endorsement controls, and the more specific provision prevails over the general.

Common Exclusions

Across dwelling, homeowners, and commercial property forms, a recurring set of exclusions appears because the perils are catastrophic, certain, or intentional:

• Flood / surface water — covered only by a separate NFIP or private flood policy.
• Earth movement (earthquake, landslide, sinkhole) — needs an endorsement or separate policy.
• War and nuclear hazard — uninsurable catastrophic exposures.
• Intentional loss — fraud and arson by the insured.
• Wear and tear, deterioration, inherent vice, vermin — these are maintenance issues, not fortuitous losses.
• Ordinance or law — increased rebuilding cost from new codes (often addressed by an endorsement).

Memory device: Flood and earthquake are the two famous "you need a separate policy" exclusions that examiners test almost every form.

Coverage Triggers, Definitions, and Limit Types

Beyond the four DICE parts, modern ISO forms include a Definitions section that controls outcomes. A single defined word — "occurrence," "insured," "residence premises," "business" — can decide a claim. For example, liability forms trigger on an occurrence (an accident, including continuous exposure, that results in bodily injury or property damage during the policy period) versus a claims-made trigger (coverage applies only if the claim is first made during the period, used in professional and some CGL forms).

How Limits Apply

Reading the Dec Page in Sequence

When an exam scenario gives facts, work the dec page first: confirm the named insured matches who suffered the loss, the property/limit covers the item, the policy period includes the loss date, and the deductible applies. Then test the insuring agreement, exclusions, and conditions. This DICE-then-definitions discipline answers the majority of coverage-determination questions efficiently.

Trap: A claims-made policy can deny a valid occurrence if the claim is reported after the policy ends and no extended reporting period (tail) was purchased.