What type of loss is excluded from coverage under the DP-3?

The exclusion of intentional damage from coverage under the DP-3 policy reflects a key principle in insurance: policies typically do not provide coverage for losses that result from the policyholder's deliberate actions. If a homeowner intentionally causes damage to their property, such losses are considered avoidable and are not insurable risks. Insurers aim to minimize moral hazard, which is the risk that individuals might engage in reckless or harmful behavior if they know they will be compensated for the consequences.

Understanding that intentional damage is a clear violation of the principle of indemnity helps clarify why it is excluded from coverage. Other types of losses, such as those caused by natural disasters or accidents, are considered legitimate risks that insurance is designed to cover, while intentional acts are clearly distinguishable as not qualifying for protection under the policy.