(800) 253-1482DP1 Policy
Summary: A DP1 policy offers basic coverage for landlords which is a more affordable way to cover rentals. However, because DP1 policies have a named peril basis and use actual cash value (ACV) reimbursement, landlords should note that there are extra risks associated with the coverage. Other landlord policies, such as a DP3 policy, may be better for your rental’s dwelling coverage and liability. Compare various carriers and policies to find the right protection for your home at an affordable rate. Estimated Read Time: 4 mins
Table of Contents:
- What Is a DP1 Policy?
- What Does a DP1 Insurance Policy Cover?
- What Does a DP1 Insurance Policy Not Cover?
- DP1 and Actual Cash Value
- What Is the Difference Between a DP1 and DP3 Policy?
- How To Get a DP1 Policy
If you are a landlord with a vacated property or simply looking to cover your rental home for less, a DP1 policy may be right for you.
Although DP 1 policies are cheaper than other types of landlord insurance, they only offer basic coverage and can leave you needing more protection in some cases.
Finding the right coverage for your needs means looking at your rental home’s needs and comparing policies and premiums to determine the best form of protection.
Below, we’re breaking down what DP1 policies cover, how they reimburse you, how they stack up against other coverage types, and how to get an accurate quote.
What Is a DP1 Policy?
A DP1 policy is a type of landlord insurance that helps you protect your rental from nine specific perils.
Also known as Dwelling Fire Form 1, these policies offer a simple form of protection used for vacant homes and rentals when landlords are looking to cut costs.
What Does a DP1 Insurance Policy Cover?
DP1 policies use a named peril basis and there are nine different perils your insurance will protect your home from, including damage from the following:
- Aircraft
- Explosions
- Fire and lightning
- Hail
- Riots
- Smoke
- Vehicles
- Volcanic explosions
- Windstorms
While DP1 coverage perils are important, other forms of landlord insurance exist offering even more protection against a larger number of potential threats.
What Does a DP1 Insurance Policy Not Cover?
Because DP1 coverages operate on a named peril basis, your policy won’t protect you from losses due to perils that aren't specifically named in the insurance.
There are many examples of things not covered by a DP1 policy, including water damage, theft, frozen pipes, power surges, falling objects (including trees), and damage to appliances.
DP1 and Actual Cash Value
Landlords should know that DP1 policies are ACV. What that means is that reimbursement is available but only after your insurance company factors in depreciation.
For example, if you have to repair your home’s exterior after a bad windstorm, and it would cost $20,000 to replace your roof, your carrier will also determine depreciation and subtract this amount before providing you with reimbursement.
So, if depreciation is $7,000 due to the age of your home, you would receive $13,000 in compensation.
The cost of labor and materials continues to rise throughout Texas, meaning the use of actual cash value can leave landlords footing the bill after a major loss.
It’s one important consideration when shopping for a DP1 policy, as they may be great if you want to save on premiums but can leave you with much larger costs after experiencing a loss.
What Is the Difference Between a DP1 and DP3 Policy?
While DP1 policies offer cheaper coverage than a DP3 policy, you’ll need to understand why the premiums are lower.
Besides a price difference, a DP1 policy covers you against fewer perils than a DP3 policy because of its name peril basis rather than an open peril basis.
Furthermore, DP1 policies use actual cash value (ACV), which factors in depreciation, which results in a lower reimbursement after a loss.
DP3 policies use the replacement cost value (RCV) of your property experiencing a loss, so you can replace it without paying out of your own pockets.
How To Get a DP1 Policy
You have plenty of options for getting a landlord insurance policy, however, not all of them are equal. Here’s how to shop for a DP1 policy, receive quotes, and find the right protection for your rental.
Assess Your Needs
Because every property is different, so too are the coverage needs your rental will face. Understanding what is important for your rental home’s protection and your finances is key to getting the right policy.
Get Mulitple Quotes
The best way to save money and protect your property is by comparing multiple carriers and getting a variety of quotes.
Each carrier is going to assess your risk differently, offer different levels of coverage, provide varying discounts, etc.
You’ll want to speak with multiple carriers and receive at least a handful of quotes to weigh your options.
If you’d like to save time, we can help you get a landlord insurance quote online. Simply click the link, select “landlord”, and fill out the form for a free, accurate quote comparing 25+ top-rated insurance companies in Texas.
Compare Coverage and Premiums Near You
Remember, each carrier is going to offer its own level of protection and each type of landlord coverage is going to protect your property differently.
A DP1 policy can be a great tool of protection for some and for others, other forms of coverage, such as a DP3 policy may be a better option.
Freedom Insurance Group helps Texans find the right coverage and on average, save 40% in doing so. Contact us and ask an agent today if a DP1 policy is right for your rental home.
