Dwelling and Homeowners Policies
Homeowners and dwelling forms
The dwelling policy (DP-1, DP-2, DP-3) covers the dwelling and appurtenant structures and fits owner-occupied homes that do not qualify for homeowners, rentals, and homes under construction. Homeowners forms add liability and are rated by form: HO-2 (broad named perils on dwelling and personal property), HO-3 (open perils on the dwelling, named perils on personal property, the most common), HO-5 (open perils on both), HO-4 (renters), HO-6 (condo unit-owners), and HO-8 (older homes, modified replacement cost).
Coverages: A dwelling, B other structures, C personal property, D loss of use, E personal liability, F medical payments to others. Section II excludes business pursuits, intentional acts, and motor vehicle liability, and covers personal activities on and off the premises. Section I special limits apply to money, securities, jewelry theft, firearms theft, silverware theft, and business property; endorsements can raise them.
Conditions: replacement cost on the dwelling usually requires insurance to at least 80% of replacement cost; personal property replacement cost is optional; the mortgagee clause protects the lender; duties after loss include prompt notice, protecting property, and proof of loss.
Traps: HO-3 does not cover flood or earthquake; theft off premises has sublimits; the definitions of insured and resident relative drive coverage; business property in the home is limited; vacancy can suspend coverage.
Rule of thumb: identify occupancy first (owner, renter, condo), then the form, then whether the loss falls under Section I or Section II.
Worked example: A homeowner has Coverage A of $300,000 on a replacement cost basis and $150,000 personal property on an ACV basis. A kitchen fire causes $40,000 replacement / $32,000 ACV to the dwelling and $10,000 replacement / $6,000 ACV to contents. The dwelling pays $40,000 less the deductible; contents pay $6,000 unless a replacement cost endorsement applies.