3.1 Dwelling Policy Forms DP-1, DP-2, DP-3

Purpose of the Dwelling Program

The ISO Dwelling Property program insures residential structures and personal property where a full Homeowners (HO) policy is unavailable or inappropriate. It is the workhorse for non-owner-occupied risks: rental dwellings, seasonal/secondary homes, tenant-occupied 1-4 family buildings, and dwellings that fail HO underwriting (vacant, older wiring, prior losses). A dwelling form covers 1-to-4 family residences only.

Unlike the HO program, dwelling forms are monoline property: liability and medical payments are NOT built in. They are added only by endorsement (DL 24 01 Personal Liability Supplement). Theft and EC perils likewise vary by form. The exam tests which perils, settlement basis, and add-ons attach to each of the three editions.

The Three ISO Forms at a Glance

Coverage and premium rise across the series. Memorize this grid — the exam draws several questions directly from it.

The current ISO editions in most states are the DP 00 0X 12 02 series, though many states use 09 18 revisions. The form-number/peril/settlement pairing is the load-bearing fact.

DP-1 Basic Form (DP 00 01)

The narrowest, cheapest form. In its base state it insures only fire, lightning, and internal explosion. The remaining standard perils attach through the Extended Coverage (EC) group — windstorm/hail, explosion (external), riot/civil commotion, aircraft, vehicles, smoke, and volcanic eruption — and Vandalism & Malicious Mischief (V&MM) is a separate optional add-on. The mnemonic WC SHAVVER (Windstorm, Civil commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic, Explosion, Riot) lists the EC perils.

DP-1 settles losses on Actual Cash Value (ACV) — replacement cost minus depreciation — and provides NO theft coverage in any configuration. That ACV + no-theft combination is the single most-tested DP-1 trap.

DP-2 Broad Form (DP 00 02)

The DP-2 builds the EC and V&MM perils directly into the form and adds a broad list of named perils: falling objects; weight of ice/snow/sleet; accidental discharge of water/steam; tearing apart/cracking/burning/bulging of a heating or AC system; freezing of plumbing; and sudden artificial electrical-current damage. Theft becomes available as an option. Critically, DP-2 introduces Replacement Cost (RC) loss settlement on the dwelling (subject to the 80% coinsurance condition), a major upgrade over DP-1's ACV.

DP-3 Special Form (DP 00 03)

The broadest dwelling form and closest parallel to HO-3. The dwelling and other structures are insured on an OPEN-perils (all-risk) basis — covered unless specifically excluded — while personal property remains on the DP-2 broad named-perils list. DP-3 also uses RC settlement. This split (open perils on the building, named perils on contents) mirrors HO-3 and is heavily tested.

With open perils, the burden of proof shifts: the insurer must prove an exclusion applies, whereas under named-perils forms the insured must show the loss came from a listed peril. That proof-burden flip is a classic exam distinction. Common open-peril exclusions on DP-3 include flood, earth movement, war, nuclear hazard, ordinance or law, neglect, intentional loss, and wear and tear — the same family of exclusions found across the property forms.

Eligibility and Occupancy

A dwelling form is appropriate when the structure is a 1-to-4 family residence and either is not owner-occupied or otherwise does not qualify for an HO policy. Incidental occupancies — a permitted home office or studio — are tolerated, but a building used primarily for business belongs on a commercial form. The DP can be written for owner-occupied, tenant-occupied, or seasonal dwellings, and the chosen coverages shift accordingly: an owner-occupant emphasizes Coverages C and E, while a landlord emphasizes Coverage D (Fair Rental Value) and often drops contents.

What the Dwelling Program Does NOT Provide

The exam repeatedly tests the gaps that distinguish a Dwelling policy from a Homeowners policy. The DP program contains no automatic personal liability and no medical payments to others — those must be added by endorsement, whereas an HO policy bundles Section II liability automatically. The DP forms also provide no theft coverage in the base form (theft can be added by endorsement on DP-2/DP-3 for owner-occupants), reflecting that dwelling policies were designed for rental and non-owner-occupied risks where theft exposure differs.

Because the DP program targets rental and seasonal dwellings, it offers flexible occupancy: the insured need not live in the dwelling, up to a limited number of families or roomers is allowed, and incidental occupancies (a small office or studio) can be endorsed. Coverage A applies to the dwelling, Coverage B to other structures, Coverage C to personal property, Coverage D/E to fair rental value and additional living expense, and the breadth of perils rises across DP-1, DP-2, and DP-3.