(800) 253-1482DP3 Policy
Summary: A DP3 policy offers landlords more protection than any other form of coverage but exclusions apply. Additionally, DP3 policies use replacement cost value for reimbursements, ensuring a larger payout. There are some applications in which DP3 policies may be right for homeowners, however, this is on a case-by-case basis. Overall, if you’re looking for the most comprehensive form of coverage for Texas landlords, a DP3 insurance policy is the answer. Estimated Read Time: 4 mins
Table of Contents:
- What Does a DP3 Insurance Policy Cover?
- DP3 Dwelling Policy Exclusions
- The Difference Between a HO3 Policy and a DP3 Policy
- DP3 vs HO6 Insurance Policy
- DP1, DP2, and DP3 Insurance Comparison Chart
- How a DP3 Policy Reimburses Your Losses
- Get a DP3 Policy in Texas
A DP3 policy is a dwelling fire policy designed to protect rental homes and homes with bad roofs from a wide range of potential perils.
Landlords can protect homes that aren’t primary residences with a DP3 insurance policy and this coverage may even be applicable to vacation homes or duplexes/townhomes.
DP3 policies don’t offer the same level of protection as standard home insurance, but they do cover more perils than other forms of landlord insurance, protect against major losses, and are the most popular form of coverage.
What Does a DP3 Insurance Policy Cover?
If you have a DP3 policy, your rental policy is covered for anything that may come your way, unless it’s explicitly listed as an exclusion. This is because DP3 policies operate on an open peril basis.
With that being said, besides exclusions, each landlord insurance policy is also going to have specific coverage limits.
If you exceed these limits, you’ll need to cover the rest of your loss out of your own pockets.
DP3 Dwelling Policy Exclusions
Just as a home insurance policy isn’t blanket coverage, neither is a DP-3 policy. You’re going to find that there are several things not included in your protection.
Keep in mind that you can purchase additional coverage to help cover perils that are excluded from your policy. These are common DP3 exclusions to be aware of:
- Flood damage is going to need a separate flood insurance policy.
- Damage from vandalism/burglaries may be covered but it depends on your policy.
- You’re also going to want to understand building codes. If you need to upgrade your place to stay in sync with Texas laws, you’ll have to do so out-of-pocket without building code/ordinance coverage.
- Excessive liability losses may require umbrella insurance.
- It’s also important to remember that personal property can be an issue, but if you’re a landlord, your tenants will need their own coverage.
The Difference Between a HO3 Policy and a DP3 Policy
If you are a homeowner looking for a DP3 policy, it’s important to speak with an insurance agent to determine your risks, budget, and the best coverage for your home.
As for landlords, if you’re renting a property, you can’t have a home insurance policy in place to protect it.
Both policies work similarly to protect homes but are not exactly the same. Here’s a simple breakdown of DP3 vs HO3:
- If the home is a property you own but you do not live in, then your duplex or townhome can likely be protected by a DP-3 policy.
- Of course, if the duplex or townhome in question is also your residence, you’re going to want to look into an HO3 homeowners policy.
- But remember, no two situations are alike, and having a dwelling fire policy could be right for you depending on your personal variables.
- Furthermore, DP3 policies protect against specific perils that deal with renting a home. For example, some carriers provide coverage in case of a loss of rental income.
DP3 vs HO6 Insurance Policy
Condos and co-op units can utilize HO6 policies for protection. This specific type of homeowners insurance protects the following:
- Dwelling coverage and protection for your structure
- Living expenses if you experience a loss of use
- Loss assessments from condo associations
- Losses due to liability
- Personal property
On the other hand, DP3 policies are for rental homes, including condos.
Therefore, if you live in your condo, an HO6 policy is right for you, but if you rent your condo, you’ll need landlord coverage.
DP1, DP2, and DP3 Insurance Comparison Chart
Landlords have multiple policy types available, each with differing reimbursement methods, levels of coverage, and costs:
When comparing DP1, DP2, and DP3 policies, remember that coverage using actual cash value (ACV) will provide a lower reimbursement than those using a replacement cost value (RCV) method.
How a DP3 Policy Reimburses Your Losses
Because DP3 policies use RCV, you’ll receive the full amount of what it costs to restore your loss after filing a claim.
However, you’ll need to maintain appropriate policy limits, as insufficient coverage means even with replacement cost value, you would need to pay out of pocket to restore your loss.
For example, if you have a DP3 policy and file a claim but haven’t maintained policy limits to account for rising labor and construction costs, you would receive the full reimbursement based on your policy’s limits and pay the rest yourself.
Landlords are encouraged to review their policy limits at least once per year to ensure that their rentals have adequate protection in the event of a major loss.
Get a DP3 Policy in Texas
Your home is unique and so too should be your protection. There are a number of scenarios that can come with protecting any property and duplexes/townhomes are often even more complex.
Finding affordable coverage doesn’t need to be a hassle and Freedom Insurance Group can help.
It doesn’t matter if you’re a homeowner looking to cover their home or a landlord in need of a more complete form of coverage for a rental property that won’t break the bank, our team is here for you.
Since 2005, we’ve been helping Texans find the right coverage to meet their needs, while also saving on premiums.
We work with more than 25 top-rated insurance companies and can help you quickly compare and save on your coverage.
Get a free home or landlord insurance quote online to find the right HO3 policy for you or ask an agent about your options today.
