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DP-3 vs DP-1 Dwelling Fire Insurance in Florida

DP-3 vs DP-1 Insurance in Florida

Understanding dwelling fire policies for rental properties, vacation homes, and investment properties. Which DP form is right for your Florida property?

Key Differences Between DP-3 and DP-1

  • DP-1 covers named perils only; DP-3 covers all perils (open peril) on the dwelling
  • DP-1 pays actual cash value (depreciated); DP-3 pays replacement cost
  • DP-1 has no liability coverage; DP-3 includes optional liability protection
  • DP-3 includes loss of rental income coverage for landlords
  • DP-3 is typically $500-$1,500 more per year but vastly more comprehensive
  • Most mortgage lenders require DP-3 minimum for rental properties

What Are Dwelling Fire Policies?

Dwelling Property (DP) policies are specialized insurance products designed for properties that don't qualify for standard HO-3 homeowners insurance. These policies focus on protecting the physical structure of the property rather than providing comprehensive personal property or liability coverage.

In Florida's robust rental and investment property market, DP policies are extremely common. They're used for rental properties, seasonal or vacation homes, properties under renovation, vacant structures, and landlord-owned dwellings. Three main DP forms exist: DP-1 (basic), DP-2 (broad), and DP-3 (special/open peril).

DP-1: Basic Named Peril Form

Coverage Highlights

  • Named perils only: fire, lightning, internal explosion, windstorm, hail, smoke, aircraft, vehicles, riot, and volcanic eruption
  • Actual cash value (ACV) basis — depreciation applies to all claims
  • No liability coverage included
  • No additional living expense or rental income coverage
  • Most affordable option for dwelling fire protection

DP-1 is the most basic dwelling form and the least expensive option. Because it covers only specific named perils, it leaves significant gaps in protection. Any peril not listed is not covered — this could include water damage, theft, vandalism, or other losses.

The ACV valuation method is also problematic. If you have a $200,000 home and a fire causes $150,000 in damage, your claim payment will be reduced by depreciation. A 20-year-old roof might be worth only $50,000 in ACV instead of the $100,000 replacement cost.

Florida Cost: DP-1 typically costs $800-$2,000 per year depending on property value and location.

Best for: Vacant land with structures, properties under major renovation, or low-value properties where premium savings justify the significant coverage gap.

DP-3: Special/Open Peril Form

Coverage Highlights

  • Open peril (all-risk) coverage on the dwelling — covers everything except specifically excluded perils
  • Named perils on personal property (if included)
  • Replacement cost coverage on the dwelling — no depreciation
  • Liability coverage available (Coverage E)
  • Medical payments coverage available
  • Loss of rental income coverage — critical for landlords

DP-3 is the most comprehensive dwelling form and is closest in functionality to an HO-3 homeowners policy, but designed for non-owner-occupied properties. The open-peril approach is fundamentally different from DP-1: instead of listing specific covered perils, DP-3 covers all perils UNLESS specifically excluded.

The replacement cost basis means that when you file a claim, you receive the full cost to repair or rebuild without depreciation deductions. For a $200,000 home, that $150,000 fire loss would be paid at full replacement cost, not reduced by the age of the roof or other materials.

Loss of rental income coverage is invaluable for landlords. If a covered loss makes the property uninhabitable, this coverage reimburses the lost rent you would have collected. For a landlord collecting $2,000/month, a 6-month unrepaired loss equals $12,000 in uncovered income without this provision.

Florida Cost: DP-3 typically costs $1,500-$4,000 per year depending on property value and location.

Best for: Active rental properties, seasonal homes, any property with a mortgage, and any property where liability protection is important. Most mortgage lenders on rental properties require DP-3 minimum.

Head-to-Head Comparison

Coverage AreaDP-1DP-3
Peril CoverageNamed perils only (10 specific perils)Open peril (all-risk) on dwelling
Valuation MethodActual Cash Value (ACV)Replacement Cost
Liability CoverageNot includedAvailable (Coverage E)
Loss of Rental IncomeNot includedAvailable
Medical PaymentsNot includedAvailable
Annual Cost (FL avg)$800-$2,000$1,500-$4,000
Mortgage Lender ApprovalRarely approvedStandard requirement

Florida-Specific Considerations

Wind and Hurricane Coverage

Both DP-1 and DP-3 include windstorm as a named peril. However, DP-3's open-peril coverage is significantly broader for wind-related damage and secondary damage (water intrusion, structural damage). In Florida's hurricane-prone environment, this broader coverage can be the difference between full restoration and significant out-of-pocket costs.

Flood Coverage

Flood is specifically excluded from both DP-1 and DP-3 policies. Regardless of which dwelling form you choose, you must purchase separate flood insurance if your property is in a flood zone or at flood risk. Flood policies are available through the National Flood Insurance Program (NFIP) or private flood insurers.

Hurricane Deductibles

Both DP forms are subject to Florida's hurricane deductible rules. These deductibles (often 5%, 10%, or higher of your coverage limit) apply specifically to wind and hail losses. The DP-3's broader protection becomes especially valuable when secondary claims from hurricanes exceed the deductible threshold.

Citizens Property Insurance

Citizens Property Insurance Corporation is Florida's insurer of last resort. Properties that can't find coverage in the private market can obtain DP policies through Citizens. These policies are typically more expensive and provide less comprehensive coverage, making private DP-3 policies preferable when available.

When to Choose DP-1 vs DP-3

Choose DP-1 When:

  • • Property is vacant or rarely occupied
  • Property is under major renovation
  • Property has very low replacement value
  • You need the absolute lowest premium cost
  • You have no mortgage lender requirements
  • Risk tolerance is high for coverage gaps

Choose DP-3 When:

  • • Property is an active rental or investment
  • Property has a mortgage lender
  • You collect rental income and need protection
  • Property is owner's liability concern (guests)
  • Comprehensive coverage is a priority
  • You want replacement cost protection

Frequently Asked Questions

A dwelling fire (DP) policy is an insurance product designed for properties that don't qualify for standard homeowners insurance. These policies cover the physical structure and are commonly used for rental properties, vacation homes, investment properties, and homes under renovation. Unlike homeowners policies, DP policies don't necessarily include liability or personal property coverage by default.
You need DP insurance when the property is not owner-occupied as a primary residence. Common situations include: rental or leased properties, vacation or seasonal homes, properties under major renovation, vacant properties, multi-unit investment properties, and landlord-owned dwellings. Most mortgage lenders will require DP coverage on rental properties.
DP-1 covers only named perils (fire, lightning, windstorm, hail, smoke, theft, etc.) and uses actual cash value (ACV) for claims. DP-3 covers all perils on the dwelling except those specifically excluded (open peril) and uses replacement cost. DP-3 also includes liability coverage options and loss of rental income coverage, making it significantly broader. The premium difference is typically $500-$1,500 per year.
No. Flood is specifically excluded from both DP-1 and DP-3 policies. If your property is in a flood zone or at flood risk, you must purchase a separate flood insurance policy. Flood policies are typically available through the National Flood Insurance Program (NFIP) or private flood insurers.
DP-1 is a basic named-peril form with limited options. While some carriers may offer limited liability add-ons, DP-1 is not designed for liability protection. DP-2 and DP-3 both offer liability coverage options (Coverage E) as standard choices. If liability protection is important for your rental or investment property, DP-3 is the better choice.
DP-2 (Broad Form) is the middle-ground option between DP-1 and DP-3. It covers a broader list of named perils than DP-1 (including water damage from plumbing, weight of ice/snow) and offers replacement cost coverage on the dwelling. Some liability options are available. DP-2 is more comprehensive than DP-1 but not as broad as DP-3's open-peril coverage.
Most mortgage lenders on rental or investment properties require DP-3 minimum or equivalent coverage. Lenders want the property to be covered on a replacement cost basis with liability protection, which DP-1 does not provide. DP-1's actual cash value basis and named-peril-only coverage don't meet standard lending requirements. Always confirm with your lender before purchasing.
DP-1 typically ranges from $800-$2,000 per year depending on property value and location. DP-3 typically ranges from $1,500-$4,000 per year. Costs vary based on the property's replacement cost, location (especially proximity to coast), condition, construction type, and loss history. Get quotes from multiple carriers to find the best rate for your specific property.

Related Resources

Home Insurance Coverage

Standard HO-3 homeowners insurance for owner-occupied homes

Home Insurance Cost

What Florida homeowners insurance costs in 2026

Replacement Cost vs ACV

How your claims payout method affects your coverage

Lessors Risk Insurance

Commercial coverage for landlords and property investors

Get a Dwelling Fire Policy Quote

Whether you're protecting a rental property, vacant structure, or investment dwelling, Greene & Associates will compare DP-1, DP-2, and DP-3 options from multiple carriers to find the right coverage at the right price.

Get a Quote 1-800-252-6885