Dwelling Policy
Purpose and eligibility
The dwelling program is designed for residential risks that do not fit the homeowners program: rented or tenant-occupied dwellings, and owner-occupied dwellings with up to five roomers or boarders. Farm risks are ineligible. Critically, the dwelling policy has no personal liability or medical payments coverage.
Forms
DP-1 basic (named perils, actual cash value), DP-2 broad (adds broad-form perils), DP-3 special (open peril on the dwelling and other structures, broad named perils on personal property), and DP-4 contents broad form for tenants. Coverages are A dwelling, B other structures (10% of A), C personal property, and D loss of use (fair rental value and additional living expense).
Loss settlement
DP-1 settles dwelling losses at actual cash value. DP-2 and DP-3 pay replacement cost on the dwelling only when the Coverage A limit equals at least 80% of full replacement cost; otherwise the loss is settled on an ACV basis. Personal property is valued at ACV unless endorsed.
Extensions and limits
Trees, shrubs, and plants (typically 5% of Coverage A, with a per-item cap such as $500), fire department service charge, removal of property, reasonable repairs, credit card and forgery, collapse, and glass breakage. Theft coverage is modest and does not follow the insured off the premises.
Traps
Assuming liability is included, assuming a business can operate out of Coverage B other structures, and forgetting that personal property remains on a named-peril basis even under the DP-3.
Worked example: DP-3 with Coverage A of $200,000 on a home with a $260,000 replacement cost. The 80% requirement is $208,000, so the insured is underinsured and a partial dwelling loss is settled at ACV, not replacement cost.