A dwelling policy (Policy forms DP-1, DP-2, or DP-3) is used to cover homes that are occupied by someone other than the owner, such as a tenant. A landlord package policy typically includes dwelling coverage for the home itself and liability coverage. Dwelling insurance is sometimes referred to as a dwelling fire policy or landlord policy.
DP-1 “Basic” Policy
A DP-1 policy offers the most basic coverage and thus is a good lower cost option for older homes or homes that may otherwise be uninsurable due to their condition. A DP-1 policy offers coverage for specifically named perils only and may only include a few such as fire, lightning and wind. Usually a DP-1 policy offers coverage for actual cash value (ACV) which is defined as replacement cost minus depreciation. Some DP-1 policies can be endorsed to offer replacement cost coverage.
DP-2 “Broad” Policy
A DP-2 policy covers more perils than a DP-1 policy. Some of the additional perils include falling objects, weight of ice or snow and water discharge from pipes to name a few.
DP-3 “Special” Policy
A DP-3 policy is a comprehensive, all-perils policy. This type of policy is very similar to what you would normally have covered under your homeowners insurance policy. Coverage for your home is usually on a replacement cost basis. A DP-3 is the most common dwelling policy.
Other Coverages Offered
A dwelling policy usually includes coverage for liability, loss of rent, medical payments, and contents to cover appliances.
Liability coverage will cover you in the event you are sued for bodily injury or property damage of other peoples property. In order for an insurance company to pay out on a liability claim, you must be found to be legally liable for damages. Liability is commonly offered in coverage amounts ranging from $100,000 to $1,000,000+. Medical payments coverage is usually included in a dwelling policy and offers a smaller amount of coverage ($1,000 – $5,000) to cover medical bills resulting from injuries that occur on your property. Unlike liability coverage, you do not need to be legally liable for a medical payment claim to be paid.
Loss of rent coverage is included in most dwelling policies. This coverage reimburses you for lost rents due to a home being unlivable because of a covered claim.
Contents coverage is available to cover belongings owned by you that are on the insured premises. This coverage will not cover your tenant’s belongings. A tenant should have their own renters insurance.
The following chart shows the different coverage provided by the Dwelling Policy Forms.