DP3 policies explained | What is a DP3 insurance policy? (2024)

FAQs

DP3 policies explained | What is a DP3 insurance policy? ›

A DP3 policy is dwelling property insurance that's customized to fit homes with older roofs or homes used as investment properties. Many insurers don't cover homes with roofs older than 10 years in coastal states or homes used for short or long-term rentals.

A DP-3 insurance policy is a dwelling fire policy that typically covers homes that aren't your primary residence. Think: vacation homes or short or long-term residential rental homes. Most owners who own rental properties need landlord insurance — and a DP-3 policy falls under that category.

Dwelling Fire Insurance for Homeowners. The Dwelling Fire Owner (or, in the insurance world, DF3-DO) policy is an "a la carte insurance policy" because it offers more flexibility than a standard homeowner insurance policy.

The biggest difference between DP3 and HO3 is the type of risk each covers. DP3 policies are most commonly for properties the owner rents to others. An HO3 policy is for owner-occupied homes. Notice, too, that some coverages are added by default, while others are optional.

DP-3 form exclusions may vary, but will typically be some or all of the following: Neglect. Intentional loss. Mold, rust, rot.

DP3 policies provide replacement cost coverage for the property and other structures. Owners can opt for Actual Cash Value (ACV) coverage if they choose. For personal property (Coverage C) in a DP3 policy, the compensation provided is ACV.

Higher liability limits are usually available on a commercial lines form than a personal lines form (DP-1 or DP-3). Higher Property limits are also usually available on a commercial form over a personal lines form. Most carriers limit their exposures on dwelling fire forms (both from a minimum and maximum basis).

DP3 Policy: Exclusions

Although there's an extensive range of perils covered in the event of damage, some perils which can be excluded from policies are: Ordinance or law. Earth movement. Power failure.

The DP-3 insurance policy typically covers perils such as theft and fire, but not natural disasters like floods and earthquakes.

Most condominiums, co-ops, and townhomes are written on an HO6 form aka “condo insurance” but some need to be written on an HO3 aka “homeowners insurance”, DP3 aka “dwelling fire policy”, or an HO4 aka “renters insurance”.

Does DP3 cover water damage? ›

Sudden & Accidental Water Damage is covered by some DP-3 rental property insurance policies. Many of the other types of water damage, like Water Backup, may be endorsed onto the policy for an additional premium depending on the company offering the insurance.

What is not covered by dwelling insurance? A standard homeowners insurance policy typically does not cover floods, earthquakes, sewer backups or damage that occurs from a lack of maintenance. You may be able to buy additional coverage or a separate insurance policy to help cover some of these additional perils.

The DP-3 may aid in identifying developmental delays, identifying the need for intervention, identifying appropriate activities to employ to strengthen identified weaknesses, and coordinating with school programs like special education and IEPs. 5 Score Formats Available: Physical. Adaptive Behavior.

While DP1 factors depreciation into claims payouts, DP3 typically pays based on the home's replacement value.

DP1 is cheaper as it covers fewer perils, while DP3 is the most expensive. DP2 insurance is in the middle, a more affordable option than DP3 that covers more risks than DP1. A DP3 policy generally covers everything a DP2 policy does, plus extra coverage.

Final answer: The DP-3 insurance policy typically covers perils such as theft and fire, but not natural disasters like floods and earthquakes.

It provides coverage for the dwelling, other structures on the property, personal property, and loss of rent or additional living expenses. Coverage for tenant or renter's contents and liability is available. While similar to the DP-3 policy, the DP-1 policy provides more limited coverage for only certain named perils.