Comparing Landlord Insurance Policies

Often, when shopping for landlord insurance, you’ll come across the term “Dwelling Policy,” which is a policy that covers homes that are not occupied by the owner. Dwelling policies vary by insurance provider; however, you’ll typically have the options of a DP-1 Policy, DP-2 Policy, and DP-3 Policy. DP-1 will be the least expensive, yet also have the least coverage, and the policies increase in price and coverage from there. Although it is the most expensive, Visio Lending always recommends a DP-3 Policy. Here’s an overview of each policy and what they typically have to offer to help you understand why.

DP-1 Policy

• Most basic policy
• Only covers Actual Cash Value, which is the replacement cost minus depreciation
• Only covers perils specifically listed in the policy
  • Common DP-1 Policy perils are: fire and lightning, windstorm and hail, and vandalism
• Typically, does not include Loss of Rent Coverage

DP-2 Policy

• Broader policy
• Includes full replacement cost coverage, instead of Actual Cash Value
• Only covers specific perils listed in the policy, yet has more perils listed than a DP-1 policy
  • Common DP-2 Policy perils are: fire and lighting, windstorm and hail, vandalism, burglary, glass breakage, smoke, riot, falling objects, freezing of pipes, and electrical damage
• Sometimes includes Loss of Rent Coverage, but not always

DP-3 Policy

• Highest level of coverage
• Includes full replacement cost coverage, instead of Actual Cash Value
• Covers all perils EXCEPT for a small list of exclusions listed in the policy
  • Common DP-3 Policy exclusions are: power failure, war, governmental action, earth movement
• Includes Loss of Rent Coverage

In addition to Loss of Rent Coverage and the highest level of peril coverage, DP-3 policies also usually include Liability Coverage. Since your investment properties are investments, protect them with the best and sleep soundly at night, knowing you are covered. Learn more about why DP-3 policies offer the best coverage. Find more information on Landlording, Landlord Insurance and more by checking out our most recent Investor Resources.

Related: Landlord Insurance: The Ultimate Guide, Save on Flood Insurance with Ameriflood Solutions, Inc