5.2 Dwelling Policy General Exclusions, Conditions & Endorsements (DP 01 31, DP 04 11, Broad Theft, DP 11 43)
Key Takeaways
- Dwelling forms share general exclusions for ordinance or law, earth movement, water damage (flood, surface water, backup, subsurface water), power failure, neglect, war, nuclear hazard, intentional loss, and governmental action.
- Key dwelling conditions include duties after loss, loss settlement, pair-or-set, appraisal, other insurance, suit against the insurer, mortgage clause, and no benefit to bailee.
- The Automatic Increase in Insurance endorsement (DP 04 11) raises the Coverage A limit gradually through the policy year by the annual percentage shown.
- Broad theft coverage is added by endorsement for owner-occupied dwellings because the base dwelling forms exclude theft of personal property.
- Under the Dwelling Under Construction endorsement (DP 11 43), the Coverage A limit is provisional and applies in the proportion that the dwelling's actual value at the time of loss bears to its completed value.
General Exclusions
The ISO dwelling forms list general exclusions that apply to all three forms. Most are introduced by an anti-concurrent-causation (ACC) lead-in: the loss is excluded regardless of any other cause or event contributing concurrently or in any sequence (Section 3.2).
| Exclusion | What it removes | Common exception or nuance |
|---|---|---|
| Ordinance or law | Increased costs caused by enforcing building codes, and demolition of undamaged parts | DP-2 and DP-3 give a limited ordinance-or-law additional coverage; DP-1 needs an endorsement |
| Earth movement | Earthquake, landslide, mudflow, sinkhole, subsidence | Ensuing fire or explosion is covered |
| Water damage | Flood, surface water, waves, tidal water, storm surge, backup through sewers or drains, subsurface water pressure | Ensuing fire, explosion, or theft (where theft is covered) is covered; flood requires NFIP or private flood coverage (Section 9.1) |
| Power failure | Failure of power or utility service originating away from the described location | If a covered peril ensues on the premises, the ensuing loss is covered |
| Neglect | Failure to use reasonable means to protect property at and after a loss | Echoes the Standard Fire Policy's neglect exclusion |
| War | Declared or undeclared war, insurrection, rebellion, warlike acts | Includes discharge of a nuclear weapon, even if accidental |
| Nuclear hazard | Nuclear reaction, radiation, or contamination | Direct loss by ensuing fire is covered |
| Intentional loss | Loss arising from an act committed by or at the direction of an insured with intent to cause loss | Other insureds' rights depend on the form and New York law |
| Governmental action | Destruction or seizure by order of governmental authority | Acts at the time of a fire to prevent its spread are covered |
Vacancy: vandalism coverage (and in the broad and special forms, glass breakage) is not provided if the dwelling has been vacant more than 60 consecutive days immediately before the loss. A dwelling under construction is not considered vacant.
Conditions That Drive a Dwelling Claim
| Condition | Key content | Adjusting tip |
|---|---|---|
| Insurable interest and limit | Pays no more than the insured's interest or the limit | Common with multiple owners of a rental |
| Duties after loss | Prompt notice; protect property; inventory; exhibit damaged property; records; examination under oath; signed, sworn proof of loss when requested | New York's § 3407 controls the proof-of-loss trigger (Section 11.1) |
| Loss settlement | DP-1: actual cash value. DP-2/DP-3: replacement cost on buildings when insured to 80%, otherwise the greater of ACV or a proportional amount; personal property at ACV | Same 80% logic as homeowners (Section 10.2) |
| Loss to a pair or set | Insurer may repair or replace any part to restore the pair or set, or pay the difference in ACV before and after the loss | Avoids paying for a whole set when one piece is damaged |
| Appraisal | Each party selects an appraiser; the appraisers select an umpire; an agreement of any two sets the amount of loss | Mirrors the Standard Fire Policy's appraisal clause (Section 11.3) |
| Other insurance | Pro rata by limits | See Section 4.2 |
| Suit against us | Suit only after compliance with policy provisions and within the policy's time limit | New York's Standard Fire Policy sets the floor at 24 months after inception of the loss for fire |
| Mortgage clause | Protects the named mortgagee; 10 days' notice of cancellation; mortgagee's proof of loss | Section 11.3 |
| No benefit to bailee | Bailees for hire cannot use the policy | Section 4.2 |
| Loss payable clause | Names a loss payee on personal property | Payee rights are no better than the insured's |
Endorsements Named on the Series 17-62 Outline
Special Provisions — New York (DP 01 31)
Dwelling policies issued in New York carry a state special provisions (amendatory) endorsement. It conforms the national form to New York law, most importantly the cancellation and nonrenewal restrictions of Insurance Law § 3425 for covered residential policies and the Standard Fire Policy minimums in § 3404. When a national-form provision conflicts with the New York endorsement, the endorsement controls.
Automatic Increase in Insurance (DP 04 11)
This endorsement raises the Coverage A limit gradually through the policy year by the annual percentage shown in the schedule (for example, 4%). The increase is prorated to the date of loss, which helps a landlord keep pace with construction-cost inflation and preserve the 80% replacement-cost test.
Worked example: Coverage A of $300,000 with a 6% annual automatic increase; loss at mid-term (half the policy year). Available Coverage A ≈ $300,000 + ($300,000 × 6% × 0.5) = $309,000.
Broad Theft Coverage (DP 04 72; the outline also lists DP 04 83)
Because the dwelling forms do not cover theft, owners who occupy the dwelling can add broad theft coverage. It covers theft, attempted theft, and vandalism following theft of covered personal property, both on and off the described location, subject to special limits for items such as money, securities, jewelry, and firearms. For non-owner-occupied dwellings, ISO offers a more limited theft endorsement (DP 04 73) that protects the landlord's property at the rented dwelling on a narrower basis.
Dwelling Under Construction (DP 11 43)
For a dwelling being built, the endorsement makes the Coverage A limit provisional. The limit is shown at the dwelling's completed value. At the time of loss, the amount of insurance equals that limit multiplied by the proportion that the dwelling's actual value on the loss date bears to its completed value. This lets the insured buy one policy at completed value while premium and recovery track the building's partially completed state.
Example: completed value and Coverage A limit $500,000; actual value at the time of a fire $200,000 (40%). The provisional amount of insurance is 40% × $500,000 = $200,000, and the loss is adjusted within that amount.
A covered dwelling policy (DP-3) is written on a rental house. An earthquake cracks the foundation and ruptures a gas line, and a fire follows that destroys the house. How is the loss treated?
A dwelling policy includes the Automatic Increase in Insurance endorsement (DP 04 11) with a 4% annual increase and a $250,000 Coverage A limit. A covered total loss occurs exactly one-quarter of the way through the policy year. What Coverage A limit is available?
Under the Dwelling Under Construction endorsement (DP 11 43), the completed value and Coverage A limit are $400,000. When fire strikes, the dwelling's actual value is $160,000. What is the provisional amount of insurance?