HO3 or DP3? | Lighthouse Insurance (2024)

FAQs

Is HO3 better than DP3? ›

An HO3 policy provides more robust coverage than a DP3 policy. The coverage included in an HO3 policy will vary depending on whether you own a single-family or multi-family home. In a single-family home, a typical HO3 policy will cover the structure and home's contents as long as damage is caused by a covered peril.

A DP3 policy is a type of dwelling property insurance policy designed for homes used as investment properties.

Understanding the Basics of DP-3 Insurance Policies

That being said, standard exclusions commonly include earthquakes, floods, intentional loss, neglect, and power failure, among other perils. Perhaps the most attractive aspect of a DP-3 insurance policy is the way it pays out claims.

DP1 insurance provides the least coverage and is cheaper. DP3 insurance provides comprehensive coverage with the option to add additional coverage. However, DP3 premiums tend to be higher.

A DP3 policy is an open peril policy, meaning your insurance carrier will cover all perils unless expressly excluded in your policy. While more expensive, a DP3 offers coverage for just about anything, making it one of the most comprehensive policies available!

For your home and other structures, HO3 is an open-perils policy. That means your insurance company can pay for damage to your home unless it's caused by an event listed in the policy as an exclusion. Some common HO3 policy exclusions are: Earth movement, such as an earthquake, sinkhole, and mudflow.

Unlike the named peril DP1 which only covers listed events, a DP3 policy covers all risks except those specifically excluded in the policy documents. This open peril approach means your rental property is protected against a wide range of perils like water damage, theft, falling objects, ice and snow, and more.

For starters, the DP3 is described as having more robust coverage than a DP1 because the DP3 is an open perils policy. That means it protects your home against all sources of loss except those the policy names as exclusions. A DP1 only protects against nine specified perils.

A DP-3 offers “open” peril coverage. A peril is any type of event or occurrence that may affect your home like fire, theft, wind, or hail.

A DP-3 policy usually covers a wide range of perils, however, damage by vandalism to a vacant property or theft in a dwelling under construction would likely not be covered. Damage to a fence due to weather conditions and wind damage to TV antennas are typically covered.

Can a condo be written as a DP3? ›

Most condominiums, co-ops, and townhomes are written on an HO6 form aka “condo insurance” but some need to be written on an HO3 aka “homeowners insurance”, DP3 aka “dwelling fire policy”, or an HO4 aka “renters insurance”.

Higher liability limits are usually available on a commercial lines form than a personal lines form (DP-1 or DP-3). Higher Property limits are also usually available on a commercial form over a personal lines form. Most carriers limit their exposures on dwelling fire forms (both from a minimum and maximum basis).

The biggest difference between DP3 and HO3 is the type of risk each covers. DP3 policies are most commonly for properties the owner rents to others. An HO3 policy is for owner-occupied homes. Notice, too, that some coverages are added by default, while others are optional.

Although an open peril policy, a DP3 does exclude risks like earthquakes and floods. However, you can choose to cover these types of perils with an endorsem*nt. You also typically won't find a renter's personal belongings covered under the policy. Renters can obtain renters insurance to protect these items.

A DP3 policy is the third and most in-depth insurance policy and is considered the best insurance cover for rental properties. Also referred to as Dwelling Fire Form 3, this insurance is suitable for residential homes that are not occupied by the owner.

Homeowners need HO-3 insurance because it provides financial coverage should your home's structure get damaged from natural disasters and other perils such as theft or fire. Throughout your life as a homeowner, many unexpected injuries can occur as well, which is why liability protection is included in your policy.

Coverage Focus: HO policies provide comprehensive coverage, including the dwelling, personal property, liability, and additional living expenses. DP policies primarily focus on covering the physical structure of the property, with less emphasis on personal property and additional living expenses.

Most basic homeowners policies do cover damage from tornadoes, so there is usually no need to elect for special tornado coverage. You might want to double-check with your insurance carrier to ensure you have enough dwelling coverage, and also, to understand your home insurance deductible.