In a previous post, we showed you the basics of dwelling fire insurance. Today, we take a closer look at the difference between DP-2 policies and DP-3 policies, plus other useful insights about this type of insurance.
What Is Dwelling Fire Insurance?
First off, a quick refresher on the basics of dwelling fire insurance.
A dwelling fire insurance policy protects homes that are NOT your primary residence, like vacation homes, secondary homes, or rental properties. In fact, this type of insurance is also known as landlord insurance.
Yes, the word “fire” is in the name, but this may be misleading. Actually, dwelling fire insurance includes protection against many other risks which are specified in your policy (more on that in a minute).
These are the typical components of dwelling fire insurance:
- Dwelling. Covers the property itself.
- Other structures. Helps with the costs of repairing or replacing separate structures like fences or detached garages.
- Personal property. Offers coverage for personal belongings such as furniture or appliances.
- Fair rental value/Additional Living Expenses (ALE). Reimburses the loss of rental income or the cost of living elsewhere if the house becomes uninhabitable due to a covered incident.
- Liability coverage. Helps pay attorney fees and court costs if the tenant or someone else sustains injuries or suffers damage to their possessions while on your property.
- Medical payments. Covers the medical expenses of people who suffer injuries while on your property.
DP-2 Policies vs. DP-3 Policies
There are three different types of dwelling fire insurance policies, classified from the most basic to the most comprehensive:
- DP-1, or basic form
- DP-2, or broad form
- DP-3, or special form
DP-1 and DP-2 policies are “named peril policies” because they offer protection only against the risks that are listed (or “named”) in your policy.
Typically, the perils named in a DP-1 policy are fire, lightning, and internal explosion. DP-2 policies include all these coverages plus burglary damage, vandalism, freezing of pipes, electrical damage, broken glass, cracking, as well as water/steam leaks, among others.
DP-3 policies are the most popular type of fire dwelling insurance because, unlike DP-1 and DP-2 policies, DP-3 insurance offers open perils coverage. This means that a DP-3 policy covers all risks, unless specifically excluded by your policy.
Some of the risks typically excluded from a DP-3 policy include war, neglect, earthquakes, and mold, but the specific list of exclusions may vary from company to company.
Wrapping It Up
In short, the most important difference between a DP-2 and a DP-3 policy is the type of coverage.
DP-1 and DP-2 policies offer named perils coverage, which is more limited compared to the open perils coverage of a DP-3 policy.
While this may seem straightforward enough, every situation is unique. To find the dwelling fire insurance policy that works for you, contact RF1 insurance today. Our team will be happy to answer all your questions.
RF1 Insurance Services: Dwelling Fire Insurance in California
At RF1 Insurance, we work with some of the world’s most trusted insurance companies, including Safeco, Guard, Stillwater, National General Premier, Aegis, and the California Fair Plan.