What the form is
The DL 24 71 Limited Fungi, Wet or Dry Rot, Or Bacteria Coverage is an endorsement to a Dwelling policy. Its primary purpose is to provide a limited amount of coverage, known as a sublimit, for losses arising from fungi (including mold), wet or dry rot, or bacteria. This endorsement modifies the Personal Liability supplement (typically DL 24 01) to buy back some coverage for these perils, which are frequently excluded or significantly limited under standard dwelling or homeowners insurance policies. The coverage provided is usually on an aggregate basis for the policy period, meaning the chosen sublimit is the maximum amount that will be paid for all claims related to fungi, rot, or bacteria during that period. The form includes a definition of "fungi" and typically clarifies that it does not apply to fungi or bacteria that are part of food products intended for consumption (e.g., mushrooms), meaning food poisoning incidents would generally be covered under the main Personal Liability section.
Classes of business it applies to
This endorsement is used in personal lines for Dwelling policies, which can cover various residential properties, including:
- Owner-occupied dwellings
- Tenant-occupied (rental) dwellings
- Seasonal homes or secondary residences
Real-world example: A landlord owns an older rental property in a humid climate. Due to concerns about potential mold growth, which is largely excluded by their standard dwelling policy, the landlord opts to add the DL 24 71 endorsement to provide a specific, albeit limited, amount of coverage should a covered loss involving mold occur and lead to property damage or a tenant's bodily injury claim.
Special considerations
There are several important points to consider regarding the DL 24 71 endorsement:
- Optional Coverage: This is an optional endorsement that must be specifically added to the policy, usually for an additional premium.
- Sublimit: The coverage provided is a sublimit, meaning it's a lower limit than the main policy's liability limit (Coverage L) and is part of, not in addition to, that overall limit.
- Aggregate Limit: The limit shown in the endorsement is typically an aggregate limit for all fungi, wet or dry rot, or bacteria related losses during a policy period.
- Varying Availability: While widely used, its availability, the specific limits offered, and premium can vary by insurance company and state. Some insurers may offer options to increase the standard sublimit.
- Not Comprehensive: It's crucial to understand that this endorsement provides limited coverage and is not a substitute for proper property maintenance to prevent mold and rot.
Real-world example: A homeowner discovers mold in their basement due to a slow, previously undetected pipe leak. Their standard dwelling policy has a broad mold exclusion. However, because they had added the DL 24 71 endorsement with a $10,000 sublimit, they can claim up to $10,000 for the costs of mold remediation and repair of the damaged property, subject to the policy terms and the cause of loss being covered.
Key information for agents and underwriters
For Agents:
- Proactively discuss the risk of fungi, wet/dry rot, and bacteria with clients, especially for older homes, homes in humid areas, or properties with a history of water intrusion.
- Clearly explain that this endorsement provides a limited buy-back of coverage and is not all-encompassing. Manage client expectations regarding the sublimit and aggregate nature of the coverage.
- Advise clients on the importance of preventative measures to mitigate mold and water damage.
- Be aware of state-specific rules or company-specific offerings/limitations for this endorsement.
For Underwriters:
- Assess the property's exposure to fungi, rot, and bacteria. Consider factors like the age of the home, geographic location (climate), visible condition, maintenance records, and any history of water-related claims.
- Determine appropriate pricing for the endorsement based on the selected sublimit and the assessed risk.
- Be clear on the definition of "fungi" and the scope of coverage provided by the specific edition of the form being used.
- Document any specific underwriting considerations or decisions related to offering this endorsement for a particular risk.