DP1 vs. DP3
The DP1 and DP3 are two types of dwelling fire policies. The DP1 is used for vacant property insurance and offers the minimum coverage amount while the DP3 is for landlord insurance where the homeowner rents out the property, but does not live there.
What's the Coverage Difference between a DP1 and DP3?
|DP-1: Vacant||DP-3: Landlord|
|Building Covered||Actual Cash Value||Replacement Cost|
|Perils Covered||Named Perils||Open Perils|
|Loss of Rents||Not Included||Optional|
|Water Damage||Not Included||Optional|
In the DP1 policy, your actual house structure is insured at actual cash value, not replacement cost. Actual cash value means if your home burns to the ground, you are probably not going to get a full home back, but only a check that compensates you for the depreciated value of the house.
The DP1 also only covers named perils - meaning only the perils or risks explicitly listed in the policy. These are usually:
- Fire, Smoke
- Wind, Hail
- Aircraft, Vehicles (hitting the house)
- Vandalism, Riot
What is the DP-1 missing that you would want coverage for:
- Water damage (2nd most common home insurance claim)
- Weight of ice, sleet, or snow
- Freezing pipes
- Appliance-related damage
- Falling objects (e.g., trees)
- Power Surge
The DP3 is usually an open perils policy. Meaning everything above would typically be covered unless your policy documents say they are excluded. An open peril policy generally means it covers everything EXCEPT what is explicitly stated as not included in the policy documents. You should read your policy documents to understand what specific coverage you have. The most common exclusions in an open peril policy are:
Note: can add coverage for extra money
Note: these are never covered
The general rule of thumb is if someone is living in the home full time and you are renting it out in a landlord arrangement, you need a DP-3. If the home is vacant and will remain empty for the next 30 days, you need a DP-1 policy. The dwelling fire policies do not usually include coverage for the contents of the home, which is why they make more sense for vacant or rental homes.
Hope that helps! If you are looking to get quotes on landlord insurance or vacant home insurance, look no further:
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