Property Policies: Dwelling and Homeowners Coverage Forms

Vocabulary practice flashcards covering terms, forms, perils, conditions, and coverages across ISO Dwelling Property (DP-1, DP-2, DP-3) and Homeowners (HO-2 through HO-8) policies.

Dwelling Property Policy

A property coverage form developed by the ISO primarily used to insure residential properties, contents, or both, commonly used for rental dwellings with up to 4 residential units and up to 5 roomers or boarders; it does not include liability coverage unless endorsed.

Hostile Fire

A fire that was not intentional and not contained within its intended boundaries, or a friendly fire that escaped its intended boundaries and caused damage to other property.

Friendly Fire

A fire that is intentionally set and stays contained within its intended boundaries, such as a fire inside a fireplace.

DP-1 (Basic Form)

A named peril dwelling property form that provides the most limited coverage, insuring against fire, lightning, and internal explosion with no minimum amount of insurance required, and allowing extended coverage perils and vandalism or malicious mischief to be added for an additional premium.

Extended Coverage Perils

An optional group of perils added to a DP-1 policy for an additional charge, remembered by the acronym WHARVES: Windstorm, Hail, Aircraft/vehicles, Riot/civil commotion, Volcanic eruption, Explosion, and Smoke.

Vandalism or Malicious Mischief (VMM)

Coverage for loss or damage caused by the willful and malicious destruction of insured property; it excludes building glass breakage (except glass building blocks in DP-1), theft of property, and any loss occurring after the premises has been vacant for more than 60 consecutive days immediately preceding the loss.

DP-2 (Broad Form)

A named peril dwelling coverage form that expands basic perils and extended coverage perils by adding broad form perils remembered by the acronym B.B. BICE-GOLF, and covering building glass breakage and explosion without the DP-1 restrictions.

DP-3 (Special Form)

A dwelling property form providing open peril coverage for the dwelling and other structures, while covering personal property on a broad named peril basis.

Dwelling Property Coverages

The core property coverages under a dwelling property policy consisting of direct coverages (Coverage A – Dwelling, Coverage B – Other Structures, Coverage C – Personal Property) and indirect coverages (Coverage D – Fair Rental Value, Coverage E – Additional Living Expense).

Coverage A – Dwelling (DP)

Direct property coverage for the residential dwelling listed on the declarations page, attached structures, building and outdoor servicing equipment, and materials and supplies located on or adjacent to the premises; it specifically excludes land.

Coverage B – Other Structures (DP)

Direct property coverage for detached appurtenant structures separated from the dwelling by clear space or connected only by a fence or utility line; excludes land, commercial/manufacturing/farming structures, and structures rented to non-tenants unless used solely as a private garage.

Coverage C – Personal Property (DP)

An optional direct property coverage in a dwelling policy covering personal property usual to a residence located on the described location for the insured, resident family members, and guests or servants at the insured's option.

Coverage D – Fair Rental Value

Indirect property coverage that reimburses the insured for lost rental income minus discontinued expenses while rented quarters are unfit for normal use due to a covered direct loss, payable for up to 2 weeks if use is prohibited by a civil authority.

Coverage E – Additional Living Expense

Indirect property coverage available under broad and special dwelling forms (or added by endorsement to DP-1) that pays for the necessary increase in living expenses incurred so that the household can maintain its normal standard of living while the described premises are unfit for normal use.

Pair or Set Clause

A condition giving the insurer the option to either repair or replace any part of a damaged pair or set to restore its pre-loss value, or pay the difference between the actual cash value of the pair or set before and after the loss.

80% Replacement Cost Condition

A loss settlement condition in broad and special forms stating that buildings insured for at least 80% of their full replacement cost immediately before a loss receive replacement cost coverage without deduction for depreciation; if insured for less than 80%, the policy pays the greater of ACV or the coinsurance calculation.

Broad Theft Coverage Endorsement

An endorsement available to owner-occupants of a dwelling that covers personal property against theft, attempted theft, and resulting VMM, providing both on-premises and optional off-premises protection with specific category sub-limits.

Limited Theft Endorsement

An endorsement designed for landlords (non-owner occupants) that covers personal property owned or used by the named insured or spouse; it excludes residence employee property and excludes any losses caused by tenants, roomers, or boarders.

Automatic Increase in Insurance Endorsement

An optional endorsement that increases the amount of dwelling insurance by an annual percentage to offset the effects of inflation in exchange for an additional premium.

Sinkhole Collapse Endorsement

An endorsement that covers the sudden settlement or collapse of earth supporting the property resulting from an underground hole created by water on limestone or other rock formations; it does not cover manmade underground holes.

HO-2 (Broad Form)

A homeowners policy providing named peril coverage on the dwelling, other structures, and personal property for 1- to 4-family owner-occupied private residences, with personal liability protection included.

HO-3 (Special Form)

A homeowners policy providing open peril coverage on the dwelling and other structures, and broad named peril coverage on personal property for 1- to 4-family owner-occupied residences.

HO-4 (Contents Broad Form)

A homeowners tenant form that covers personal property for broad named perils and provides loss of use coverage, without providing direct property coverage on the dwelling building itself.

HO-5 (Comprehensive Form)

A homeowners policy providing open peril coverage on the dwelling, other structures, and personal property, which expands the definition of theft to include mysterious disappearance (misplacing or losing insured property).

HO-6 (Condominium Unit Owners Form)

A homeowners form designed for owner-occupants of a residential condominium unit, covering alterations, appliances, fixtures, and interior improvements required by the condominium association agreement, alongside personal property and loss of use.

HO-8 (Modified Coverage Form)

A homeowners policy form designed for historic or older homes where replacement cost is considerably higher than market value, settling building losses on a functional replacement cost or actual cash value basis.

Coverage E – Personal Liability (HO)

Section II homeowners coverage providing a standard basic limit of $100,000 to pay damages and insurer-funded legal defense costs for bodily injury and property damage for which an insured is legally liable.

Coverage F – Medical Payments to Others (HO)

Section II homeowners coverage that pays necessary medical expenses incurred within 3 years (36 months) of an accident causing bodily injury to guests or third parties on or off the premises, without regard to fault.

Coverage D – Loss of Use (HO)

Section I homeowners property coverage combining Fair Rental Value and Additional Living Expense to pay necessary increased living costs and fair rental value losses when a covered peril makes the residence premises uninhabitable.

Liberalization Clause

A policy condition stating that if the insurer broadens coverage under the policy form without an additional premium charge during the policy period or within 60 days before the effective date, the expanded coverage automatically applies to the insured's policy.

Residence Employee

An employee of the insured whose duties are related to the maintenance or use of the residence premises, including performing household domestic duties elsewhere.

Mysterious Disappearance

The misplacing or losing of insured property, which is included under the definition of theft specifically within the HO-5 comprehensive homeowners policy.