1. Forms
2. DP
3. DP-05-36

What the Form Is

The DP 05 36 Exclusion of War Terrorism endorsement is designed for use with Dwelling property policies. Its primary function is to explicitly remove coverage for loss or damage directly or indirectly caused by war, warlike action, or terrorism. This endorsement replaces any pre-existing war exclusion language within the policy, typically providing a more absolute and clearly defined exclusion for these types of perils. It includes a specific definition for "terrorism" to clarify the scope of the exclusion.

Classes of Business It Applies To

This endorsement is applicable to residential properties insured under Dwelling Program policies, such as:

• DP 00 01 (Basic Form)
• DP 00 02 (Broad Form)
• DP 00 03 (Special Form)

Dwelling policies are commonly used for properties that may not meet the eligibility requirements for a standard homeowners policy. Real-world examples include:

• Rental properties (e.g., a landlord insuring a single-family home or duplex rented to tenants).
• Dwellings occupied by someone other than the named insured.
• Older homes or homes with lower market values.
• Vacation homes or secondary residences that are not the owner's primary residence.

In these scenarios, the DP 05 36 endorsement could be attached to the underlying Dwelling policy to exclude war and terrorism risks.

Special Considerations

• Mandatory or Optional: The use of this endorsement can vary. While it became more prevalent after significant terrorism events, its attachment might be at the insurer's discretion or, in some cases, a mandatory part of the coverage offering depending on the insurer's underwriting guidelines and the regulatory environment.
• Separate Filing: Interested insurers often need to make a separate filing with state insurance departments to use this form.
• Clarity of Exclusion: The form aims to create an absolute exclusion for war and terrorism, leaving little room for ambiguity regarding these specific perils. Policyholders must understand that events falling within the definitions of war or terrorism in the endorsement will not be covered.
• Impact on Coverage: This is a significant exclusion. While war and terrorism events are generally considered low-frequency, they can be high-severity. Policyholders should be made fully aware of this gap in coverage.

Key Information for Agents and Underwriters

• Agent's Responsibility: Agents must clearly communicate the presence and impact of this exclusion to the insured. It's crucial that the policyholder understands that losses from war or terrorism are not covered under the policy when this endorsement is attached. Proper documentation of this communication is advisable.
• Underwriting Guidelines: Underwriters should be aware of their company's specific guidelines regarding the use of this endorsement. It helps in defining the scope of coverage and managing catastrophic risk exposure. The presence of this endorsement means the insurer is not taking on the financial risk associated with war and terrorism perils for that specific policy.
• Risk Assessment: While the endorsement excludes these perils, the underwriter's overall assessment of the property's other risks (fire, theft, liability, etc.) remains crucial.
• Pricing: The premium for the Dwelling policy would reflect the fact that war and terrorism are excluded perils. If such coverage were available (e.g., through a separate, specialized policy, which is rare for these perils), it would come at a significant additional cost.
• Regulatory Landscape: Stay informed about any state-specific regulations or bulletins related to terrorism exclusions and the Terrorism Risk Insurance Act (TRIA) and its extensions, although TRIA primarily addresses commercial lines, awareness of the broader context is useful.