TUESDAY, MARCH 17, 2015
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.
On most DP3, 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.
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