Chapter 7a Notes – Other Residential Insurance

What is typically used to insure rental dwellings according to the ISO Special Form?

The DP-3 Dwelling Property policy.

Under what conditions might a residence not be eligible for traditional homeowners coverage?

If the residence is not owner-occupied, its value is below the minimum limit for a HO policy, or it does not meet an insurer’s underwriting standards.

What are two reasons an insured might choose not to purchase a homeowners (HO) policy?

They may not need the full range of HO coverages or the HO policy may cost more than they are willing to pay.

What is a key difference between DP-3 and HO-3 policies?

DP-3 does not provide theft coverage for personal property or liability coverage.

What five coverages does the DP-3 policy offer?

Coverage A - Dwelling, Coverage B - Other Structures, Coverage C - Personal Property (except no theft coverage), Coverage D - Fair Rental Value, Coverage E - Additional Living Expenses.

What does FAIR stand for in insurance?

Fair Access to Insurance.

What types of properties do FAIR plans cover?

Urban areas susceptible to civil commotion, coastal properties with high windstorm exposure, and wooded suburban areas with high brush fire exposure.

What are the eligibility criteria for FAIR plans?

A property must be ineligible for traditional coverage in the voluntary market and must have an inspection by the FAIR plan administrator.

What coverage do FAIR Plans provide?

Coverage for fire and a limited number of other perils like vandalism and windstorm.

What do Beachfront and Windstorm Plans provide coverage for?

Properties along the Atlantic Coast or Gulf Coast that are vulnerable to windstorm losses.

What must properties meet to be eligible for Beachfront and Windstorm Plans?

They must be ineligible for traditional coverage and located within a state-specified distance of the shoreline.

What happens if a hurricane has already formed in the immediate area?

No application for coverage will be accepted.

What must insurers writing property coverage in a state do regarding plan losses?

They are required to share in the losses proportionally to their share of state property insurance premiums.