Dwelling Coverage
The dwelling forms
Dwelling policies (DP-1 basic, DP-2 broad, DP-3 special) insure a dwelling and its contents and are commonly used for owner-occupied homes, rental dwellings, and secondary residences. They are not homeowners policies: liability and medical payments coverage are not built in and must be added by endorsement. Standard coverages are Coverage A dwelling, Coverage B other structures, Coverage C personal property, and Coverage D fair rental value. Typical internal limits are 10% of Coverage A for other structures and 50% of Coverage A for personal property, both usually adjustable.
Perils and valuation
DP-1 and DP-2 are named-peril forms. DP-3 is open peril on the dwelling and named peril on personal property unless extended. Replacement cost settlement on the dwelling and contents usually requires an endorsement, and many forms apply an insurance-to-value requirement; if the limit is too low, settlement is reduced even without a formal coinsurance clause. Extended replacement cost and inflation guard endorsements increase protection.
Traps
- Assuming a dwelling policy includes liability - it does not.
- Forgetting Coverage B is a percentage of Coverage A, not a separate large limit.
- Confusing fair rental value (the rental income or rental value lost) with additional living expense.
- Missing business pursuits, vacancy, and ordinance or law exclusions.
- Multiple structures on one premises may exhaust Coverage B.
Rule of thumb: a dwelling policy is a property policy first; read the endorsements to see what liability, replacement cost, and perils have been added.