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Rental Property Insurance - Dwelling Fire DP 1 vs DP 3


Dwelling Fire – Form 3 (DP-3)


A Dwelling Fire Form 3 (DP-3) is the best  insurance coverage that you can purchase for residential rental properties. Unlike DP-1 and DP-2 policies, which are ‘named perils only’, the DP-3 dwelling policy form provides what is known as ‘all risk’ or ‘open perils’ coverage, which means that just about everything is covered unless it is specifically excluded in the language of the policy itself.  DP-3 policies are more expensive than their DP-1 and DP-2 cousins, but the extra  money is well-worth the additional coverage afforded to you as a property owner.

DP-3 policies contain all of the same coverages as the DP-1 and DP-2, but as mentioned above, they also cover most other causes of loss unless the policy specifically says it doesn’t.

Also, claims and losses are automatically settled on a ‘replacement cost’ basis and coverage against vandalism and malicious mischief (VM&M) and and water damage (‘accidental discharge’) are also included. DP-1 policies are written on a  Actual cash Value basis. This means if your Kitchen cabinets are damaged your claim payment would be the cost new minus depreciation. This can subtract a substantial amount of money from your claim payment. Many DP-1 policies excluded coverage for water damage coverage and  vandalism or malicious mischief . DP-1 policies also do not offer coverage from falling objects. If there are trees located around the property I highly recommend purchasing the DP-3 policy form.  

Also see Blog: Who is responsible for the neighbors fallen tree.


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Some important things to know about basic DP-3 policies:

Not all insurance companies offer DP-3 policies and coverages.
DP-3 policies can be issued for either non-owner occupied or owner-occupied dwellings and they ARE NOT available for vacant homes or properties.
Vandalism and Malicious Mischief as well as coverage for Water Damage is included.

Investors and property owners also need to consider additional coverage listed below.  It is important to know that not all companies offer these endorsements with their policies and it is up to you and your agent to decide whether or not these are necessary for your situation.

Loss of Rent– when a property is damaged due to a covered loss and the property is uninhabitable while being repaired; this coverage will pay the property owner up to six month’s worth of rental income to cover the loss of this money while the property is being repaired. Most banks and lenders actually require this coverage when lending on non-owner occupied properties.

Vacancy Clause – If the property is unoccupied for 61 continuous days or more, DP-1 policies will, depending upon the company, either automatically cease coverage altogether or they will reduce coverage to only insuring the perils of fire and lightening.  Purchasing a ‘vacancy clause endorsement’ (which can be quite expensive) ensures that in the event of continuous vacancy, the policy will not cease or reduce coverage.

If you would like more information on Insurance options for Rental Properties or would like to get a Quote on your Rental property give us a call at 1-800-252-6885 or visit our Home Insurance Quote Page for a Free online Quote. 


Greene & Associates Insurance provides  Insurance Quotes, Rates and Policies online for Home, Auto and Business Insurance for the entire State of Florida including Lake City Fl, Jacksonville Fl, Gainesville Fl, Alachua Fl, Live Oak Fl, Ft White Fl, Branford Fl, Ocala Fl, Middleburg F, Greene Cove Springs Fl & St Augustine Fl
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1 Comments

Louise adamson said...
What is cover under a Dp1 policy?
MONDAY, DECEMBER 05 2016 9:00 AM

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