Wrap-around option No. 1—HO policy wrapped around an ACV DP-1 policy The first wrap-around option is the voluntary offer of either a HO-2 or a HO-3 policy (some insurers also may offer a HO-5 policy, which expands the covered perils applicable to personal property). These homeowners policies will cover all property on the basis of their own terms to the extent not covered by the NYPIUA DP-1 policy. Keep in mind that under every option, only the homeowners policy covers the insured's personal property.
HO-2. Besides the DP-1 perils, the ISO Homeowners 2—Broad Form (HO 00 02 10 00) policy insures the following perils:
weight of ice, snow or sleet;
accidental discharge or overflow of water or steam;
sudden and accidental tearing apart, cracking, burning or bulging;
sudden and accidental damage from artificially generated electrical current.
In addition, "vandalism or malicious mischief" will be provided by the homeowners policy, because this peril is not eligible to be added to the NYPIUA DP-1 policy when combined with a wrap-around policy. And, since "volcanic eruption" is endorsed off all NYPIUA DP-1 policies (UA-538), this peril will be covered by the homeowners policy.
HO-3. The ISO Homeowners 3—Special Form (HO 00 03 10 00) policy insures covered property for all risks of direct physical loss that are not excluded. Below are some examples of actual claims paid under open perils (HO-3), but not payable under broad form perils (HO-2):
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an unbalanced washing machine took a walk and damaged the hot water heater; a window left open in a rainstorm allowed water to damage the interior walls and floor; water backed up on the roof, causing leaks, where no physical damage was done to the roof (caused by an "ice dam"—very common in the Northeast); a fence was damaged by the new 16-year-old driver of the family car; while a homeowner was moving a large dresser, it rolled down the stairs and through a wall; a homeowner's young child with a hammer did some redecorating; a homeowner missed the joists while attic walking and fell through the ceiling; a deer bled and roughed up the interior of the home after jumping through a picture window; a chandelier fell while it was being cleaned; a furnace working overtime due to a faulty thermostat warped cupboards and ruined drapes; and a countertop was scorched from a hot appliance.
When the NYPIUA DP-1 and the homeowners policy overlap by covering the dwelling for the same perils, the DP-1 policy is intended to be primary. However, since the DP-1 policy settles a loss on the basis of actual cash value, the homeowners policy will pay the additional amount needed to replace the property.
When a homeowners policy wraps around the NYPIUA DP-1 policy, personal property should not be written on the DP-1 policy; it is intended that only the homeowners policy covers the contents. Besides filling the gaps in property coverage, the homeowners policy also provides the personal liability coverage.