What is a DP3 policy?
A DP3 policy is dwelling property insurance that’s customized to fit homes with older roofs or homes used as investment properties. Many insurers don’t cover homes with roofs older than 10 years in coastal states or homes used for short or long-term rentals.
Because this policy includes the roof surfacing payment schedule endorsement, it offers homeowners a major discount on their premium. This endorsement covers the roof for its actual cash value coverage only when it’s damaged by wind or hail. For all other covered sources of damage, the roof and the rest of the home’s structure are insured for their replacement cost.
Homeowners can also modify a DP3 policy by opting out of personal property coverage and adding fair rental income protection. These make DP3 a good choice when you’re renting your home to others.
DP3 insurance guides
People often use the term "landlord insurance" for DP3 policies. Check out our landlord insurance guides in the following states:
What do DP3 policies cover?
Dwelling property insurance policies typically cover the physical structure, but you can usually add endorsements to a DP3 to cover:
DP3 policies are the most popular kind of dwelling property insurance, perhaps because they are written on an open perils basis. This means damage is covered unless it’s caused by an event listed 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:
- Is my roof 10 years old or older? For this one, it doesn’t matter whether or not you rent your home. An older roof can make you ineligible for coverage for many insurance companies.
- 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.
