1. Forms
2. DP
3. DP-04-18

What the form is

The DP 04 18, titled "Windstorm or Hail Broad Form and Special Forms," is an endorsement designed to modify the standard Dwelling Program policies, specifically the DP 00 02 (Dwelling Property 2 - Broad Form) and the DP 00 03 (Dwelling Property 3 - Special Form). Its primary function is to add or expand coverage for trees, shrubs, plants, and lawns against damage caused by windstorm or hail. While the base DP 00 02 and DP 00 03 forms may provide some coverage for trees, shrubs, and other plants, this endorsement specifically addresses and often enhances coverage for the peril of windstorm or hail for these items.

Classes of business it applies to

This endorsement is used for residential dwellings insured under the ISO Dwelling Program. This typically includes:

• One to four-family dwellings that are not owner-occupied (rental properties).
• Owner-occupied dwellings that may not qualify for a standard homeowners policy for various reasons.
• Dwellings under construction (when attached to an eligible Dwelling policy).

Real-world example: An insured owns a rental property (a duplex) insured on a DP 00 03 Special Form policy. The property has several mature oak trees and landscaped shrubs. To ensure these landscaping elements have coverage against damage from a hurricane or severe thunderstorm (windstorm/hail), the agent would recommend adding the DP 04 18 endorsement to the policy.

Special considerations

• Attachment to Specific Forms: This endorsement is specifically designed to be used with the DP 00 02 or DP 00 03 forms. It is not a standalone policy.
• Coverage Limits: The endorsement typically specifies a maximum amount payable for any one tree, shrub, or plant (e.g., $500). There is also an aggregate maximum limit of liability for all trees, shrubs, plants, and lawns, often stated as a percentage of the Coverage A (Dwelling) limit (e.g., 5% of Coverage A).
• Additional Insurance: Coverage provided by this endorsement is usually considered additional insurance, meaning that a loss paid under this coverage does not reduce the Coverage A limit of liability for the dwelling itself.
• Deductible: A windstorm or hail deductible may apply to losses covered under this endorsement, which could be different from the policy's standard deductible.
• Peril Specific: The coverage added or modified by this endorsement is specifically for the perils of windstorm or hail. Other perils causing loss to trees, shrubs, etc., would be subject to the terms of the base policy.

Real-world example: If a tornado (windstorm) damages several trees on the insured rental property, the DP 04 18 would provide coverage up to $500 for each damaged tree, subject to an overall limit of 5% of the dwelling's insured value. If the dwelling is insured for $200,000, the total available for all damaged trees and shrubs from that event under this endorsement would be $10,000 (5% of $200,000), with no single tree being paid more than $500.

Key information for agents and underwriters

• Risk Assessment: Underwriters should consider the geographic location of the property and its susceptibility to windstorm and hail events. Properties in coastal areas or regions prone to severe convective storms may present a higher risk.
• Valuation and Exposure: Agents should discuss with the insured the value and extent of their landscaping to determine if the standard sublimits and aggregate limit offered by the endorsement are adequate. While the endorsement provides some coverage, it may not be sufficient for properties with extensive or exceptionally valuable landscaping.
• Clarity on Coverage: It's crucial for agents to explain the specific sublimits per item and the overall aggregate limit to the insured to avoid misunderstandings at the time of a claim.
• Base Form Requirement: Ensure that the underlying policy is indeed a DP 00 02 or DP 00 03, as this endorsement is not intended for use with the DP 00 01 (Basic Form) for this specific wind/hail coverage for plants (though DP 00 01 can have a different plant endorsement, DP 04 17).
• Pricing: An additional premium is typically charged for adding this endorsement, reflecting the increased coverage.
• Underwriting Guidelines: Company-specific underwriting guidelines may exist regarding the eligibility for this endorsement, such as the condition and maintenance of the property and its landscaping.