Dwelling Policy and Other Residential Property Forms
This domain contrasts the dwelling policy with homeowners forms and covers other residential property forms. Expect eligibility, DP-1, DP-2, and DP-3 coverage differences, the absence of liability coverage, and the renters and condominium forms.
Dwelling policy structure
- Covers Coverage A dwelling, Coverage B other structures, Coverage C personal property, and Coverage D fair rental value.
- The DP-1 is basic named perils; DP-2 is broad named perils; DP-3 is open peril on the dwelling and named peril on personal property.
- Dwelling policies do not include personal liability or medical payments. A landlord or owner who needs liability must add it or use another form.
- Eligible occupancies are generally one-to-four family dwellings, including rental properties, but not commercial risks. Vacancy and unoccupancy conditions can reduce or suspend coverage.
- Loss settlement is usually actual cash value unless replacement cost is endorsed. Theft and other crime coverage may be limited or added by endorsement.
Other residential forms
- HO-4 renters covers personal property, loss of use, and liability; it does not cover the building.
- HO-6 condominium unit owners covers building elements inside the unit, personal property, and liability; the association master policy covers common elements.
- Mobile home and farm forms adapt property and liability coverage to those exposures.
Worked example
An owner rents a duplex to tenants and buys a DP-3. A kitchen fire damages the building and the tenant's furniture. The DP-3 pays for the building damage, subject to the limit and deductible. The tenant's furniture is not covered because it belongs to the tenant, not the insured landlord. The landlord's liability exposure also is not covered unless liability coverage is added.
Traps
Do not assume a dwelling policy includes liability. Do not use an HO-4 to insure the building. Do not ignore vacancy conditions or ACV settlement.