DP-3 (special dwelling form)

DP-3 (ISO DP 00 03) is the broadest of the three dwelling forms. It insures the dwelling and other structures on an open-perils basis, so a direct physical loss is covered unless the policy excludes it, much like the building coverage in an HO-3. Personal property, if you elect it, stays on named perils and is usually paid at actual cash value unless replacement cost is added. Fair rental value and additional living expense are included.

It is the form most often used for rental houses, second homes and some vacant or seasonal properties, and many insurers use it when a home does not qualify for an HO-3. The same exclusions apply as on a homeowners policy: flood, earth movement, wear and tear and neglect remain outside it.

What the DP-3 lacks is a liability package. Personal liability and medical payments coverage must be added by endorsement or bought separately, and a landlord who skips that step carries the lawsuit risk alone. Watch the vacancy language, too: most dwelling forms limit or exclude some losses, such as vandalism, once a property has been vacant for a set number of days; see vacancy and unoccupancy exclusions. Compare the three forms in Dwelling fire policies: DP-1, DP-2 and DP-3.