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When you’re looking for a landlord insurance policy, you’ll typically come across the term “Dwelling Policy,” which is a policy used to cover homes that are not occupied by the owner (perfect for rental properties). While all dwelling policies vary by insurance provider, there are typically three levels of policies you’ll encounter: DP-1, DP-2, and DP-3. We strongly recommend getting a DP-3 policy, and here’s why.
DP-3 policies offer the most coverage. Unlike DP-1 and DP-2 policies, which list specific perils covered in each policy, DP-3 policies cover all perils with a few exceptions listed on the policy. In the event of a disaster that is not covered on any policy, the landlord is fully responsible for payments, so the more coverage the better. DP-3 policies also offer full Replacement Cost Coverage, whereas DP-1 policies only provide Actual Cash Value coverage, which is the replacement cost minus depreciation (this can really add up).
Additionally, standard DP-3 policies in the United States usually include Loss of Rent Coverage and Liability Coverage. Loss of Rent coverage guarantees your income in the case you cannot rent out your property due to a natural disaster, and Liability Coverage takes care of legal and medical expenses related to injuries on the property. You are going to need all of this coverage, so it is ideal to have it under one policy. While more expensive, DP-3 policies will provide the coverage you need as a landlord.
To learn more about why DP-3 policies are the best for landlords and more about landlord insurance, visit our Insurance Page.