What is a DP3 policy?

A DP3 policy is a type of dwelling property insurance policy designed for homes used as investment properties.

What do DP3 policies cover?

Dwelling property insurance policies typically cover the physical structure, but they can also come with limited personal property coverage for your belongings you keep at your rental property, and can have fair rental income protection. ou can usually add endorsements to a DP3 to cover:

• Premises liability.

• Medical payments for injured visitors.

DP3 policies are the most popular kind of dwelling property insurance (compared to the more limited DP1 and DP2 policies), perhaps because they are written on an open perils basis. This means damage is covered unless it’s caused by an event listed as an exclusion in the policy. Some of the most commonly excluded perils are:

• Ordinance or law.

• Earth movement.

• Water damage.

• Power failure.

• Neglect.

• War.

• Nuclear hazard.

• Intentional loss.

• Governmental action.

• Mold.

How do I know if I need a DP3 policy?

The most common reason homeowners buy a DP3 policy is because they’ve decided to rent out either their entire house or a portion of it and aren’t going to continue living there. But people often get dwelling property insurance if they have an older roof that’s made it difficult to insure their home.

Here are a few good questions to ask before you decide on a DP3 policy:

• What risks does this property face? DP3 is the only dwelling property policy written on an open perils basis. It provides broader coverage than DP1 or DP2.

• How important is my rental income to me? If rent is a major portion of your income, then loss of rent coverage is essential to your recovery, too.

• Can I afford to repair damage to this property? Getting the full replacement cost value of your property can help you recover quickly, but only if you can get insurance in the first place.

Worth noting: While there are a lot of similarities between an HO3 policy and a DP3, a DP3 can cover some risks a standard HO3 can’t. Learn about the difference between DP3 and HO3.

We can help you decide the appropriate amount of risk to retain within your budget.

Can a DP3 policy cover my vacation home?

Dwelling property insurance may be appropriate for non-owner occupied homes, including:

• Seasonal homes.

• Vacation properties.

• Short-term rentals, like properties listed on Airbnb or Vrbo.

When in doubt, tell your insurance company how you use your home. They can help you find the appropriate policy.