(800) 253-1482DP2 Policy
Summary: A DP2 policy offers the best of both worlds. Texas landlords receive a boost from basic coverage with protection from 18 perils, however, it costs more than a DP1 policy and doesn’t protect as much as DP3 coverage. When determining the right form of coverage, you’ll need to assess your risk tolerance, budget, and coverage needs Estimated Read Time: 4 mins
Table of Contents:
- What Is a DP2 Insurance Policy?
- What Does a DP2 Policy Cover?
- When Do You Need DP2 Coverage?
- Get a DP2 Insurance Policy in Texas
Landlords looking to stay covered for a wider range of perils but want to save on premiums may do well with a DP2 policy.
While not the best coverage available, DP2 coverage is also cheaper than DP3 policies, offering a healthy balance for landlords looking to maintain a budget.
Understanding your risk tolerance and the perils your rental home may face are both important for finding the right policy.
Below, we’re looking at how to define a DP insurance policy, how it covers your rental, how it compares to other landlord coverages, and how to save on your coverage
What Is a DP2 Insurance Policy?
A DP2 policy, also known as a Dwelling Fire Form 2, is a coverage that uses a named perils basis to cover rental homes.
Situated between a DP1 and DP3 policy, many landlords find this type of insurance is the perfect balance of coverage and cost for their needs.
Each policy, landlord, and carrier is different, however, both in coverage and price, while DP2 policies typically fall in the middle, individual factors will affect your home’s premiums.
What Does a DP2 Policy Cover?
A DP2 policy uses a named perils basis for coverage and will protect your home and other structures on your property from 18 different perils.
The other structures that may be covered include detached garages, fences, patios, sheds, etc.
Keep in mind that you may have to add liability coverage to protect you from potential losses due to a lawsuit.
Landlords in Texas are only protected for the perils specifically listed in the policy, so be sure to double-check your coverage’s specific details.
Here are the named perils a DP2 policy will protect your rental home from:
- Aircraft
- Broken glass
- Bulging/cracking
- Burglaries
- Collapse
- Discharge of water or steam
- Electrical
- Explosions
- Falling objects
- Fire and lightning
- Frozen pipes
- Riots
- Smoke
- Vandalism
- Vehicles
- Volcanic eruption
- Weight of snow
- Windstorm/hail
RCV Coverage
In addition to the extra perils you are protected from, a DP2 policy also uses replacement cost value for your reimbursement.
A DP1 policy uses actual cash value (ACV), which factors in depreciation, and as a result, provides you with a lower amount of compensation when you file a claim.
By using RCV, a DP2 policy can help you account for rising construction and labor costs to restore your home to new without having to pay out of pocket.
Contents Coverage
Landlord insurance doesn’t generally cover personal property at your rental home, with some exceptions available if that property is helping your rental function.
Nevertheless, you can add a limited amount of contents coverage to a DP2 policy if you need to do so.
For example, if you leave a lawnmower at the home and your tenants use it to cut the lawn, you can add coverage because the property is used to maintain the home. Similarly, you can use this coverage for appliances.
Tenants looking to cover their own personal belongings will still need to get a separate renter's insurance policy.
If you are looking to protect your personal property from theft, you’ll need to seek additional protection, which may be available depending on your carrier.
Loss of Rent Coverage
Also known as fair rental value coverage, landlords can protect themselves from a loss of rental income, should a loss occur that makes your home uninhabitable.
In Texas, the policy limits for loss of rent coverage typically have a max of your policy’s dwelling coverage.
After a disaster, and under dire circumstances, some government assistance and programs may be available to help, but they can take time and add frustration.
Having the right policy is going to help you protect your investment and make up for the lack of cash flow.
When Do You Need DP2 Coverage?
Texas landlords can benefit from DP2 coverage. If you meet the following criteria, this type of policy may be right for you:
- Your rental home is not vacant.
- You are capable of balancing the risk of a DP2 policy with the reward of lower premiums.
- You are looking to cut costs but maintain a good amount of coverage in case of an emergency.
- You can handle replacing property affected by a major or total loss out of pocket with the help of an insurance policy.
Again, each policy is different. Your best bet is to compare your needs, budget, and risks with a licensed insurance agent to discuss the right policy for you.
Comparing DP2 vs DP3 Insurance Policies
The main difference between DP2 policies and DP3 policies is the amount of coverage you receive. If you are looking for a more comprehensive approach, you may need to get a DP3 policy.
Of course, the more coverage you enroll in, the more protection you receive but you also pay higher premiums.
Get a DP2 Insurance Policy in Texas
If you are looking for a landlord insurance policy that keeps your rental home protected but doesn’t break the bank, Freedom Insurance Group can help.
Our team works with over 25 top-rated insurance companies operating in the Lone Star State to help you compare more coverage options, find the most affordable option, and save without sacrificing protection.
Get a free landlord insurance quote online by clicking the link, selecting “landlord”, and filling out the form to shop DP2 policies near you, or ask an agent today.
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.
