DP1 and DP3 are two types of dwelling fire policies. The DP1 policy is used for vacant property insurance and this option offers the minimum coverage amount. The DP3 is used for landlord insurance where the homeowner rents out the property, but does not actually live there.
In the DP1 policy, the house structure is insured at cash value, not at the replacement cost. This means that if your home burns down, you are most likely not going to get a full home back, but instead you will receive a check that compensates you for the depreciated value of the house.
The DP1 also only covers “named perils” – which means it only covers the hazards or risks listed in the policy. These are usually:
● Fire, Smoke
● Wind, Hail
● Aircraft, Vehicles hitting the house
● Vandalism, Riot
This means that the DP1 could leave a lot of important things out. Here’s what the DP1 is missing that you will want to have coverage for:
● Water damage (especially here in Florida)
● Weight of ice, sleet, or snow
● Freezing pipes
● Appliance-related damage
● Falling objects, falling trees
● Power surge
The DP3 is usually an open perils policy. This means that everything listed above would typically be covered unless your policy documents state exclusions. An open peril policy generally is given for all types of damage outside of the perils not included in the policy documents. It is very important to read your policy documents to understand what specific coverage you have.
The most common exclusions in an open peril policy are…
● Replacement Costs
● Personal Umbrella
● Sewage Backup / Sump Pump
● Identity Theft
● Home Sharing
● Lateral Lines Coverage
● Home Daycare
If you are wondering what is NEVER covered in DP1 or DP3 policies, here is a general list:
● Damage By Government
● Wear & Tear
● Vandalism On A Vacant Property
● Snow On Outdoor Property
● Birds, Vermins, Insects
● Power Interruption
● Intentional Losses
● Vacant / Freezing
● Nuclear Hazards
While this topic may be confusing, just remember…if someone is living in the home full time and you are renting it out in a landlord arrangement, you will need a DP3. If the home is vacant and will remain empty for the next 30 days, you will need a DP1 policy.
For more information about these policies or for questions on your existing policies, contact our team of Insurance Experts today!