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

The Dwelling Program in Context

A dwelling policy is property insurance for one- to four-family residential buildings written on an Insurance Services Office (ISO) dwelling form. It exists for risks the homeowners (HO) program will not take: landlord rentals, seasonal cabins, homes under renovation, and older dwellings with weak protection classes. Because the form descends from the old standard fire policy, agents still call it dwelling fire.

The headline rule a candidate must internalize first: the dwelling form is property only. There is no liability and no medical payments unless added separately.

Three Forms, Rising Breadth

Coverage and premium climb across the series. The form you select fixes the breadth of perils; endorsements then bolt on extras such as theft, liability, or ordinance-or-law cost.

DP-1: The Basic Form

The DP-1 is the cheapest, narrowest option. In its base state it insures only fire, lightning, and internal explosion. Other common causes are added by attaching the Extended Coverage (EC) group and Vandalism and Malicious Mischief (V&MM).

The EC perils to memorize: windstorm or hail, riot or civil commotion, smoke, aircraft, vehicles, volcanic eruption, and explosion. Two facts dominate DP-1 questions:

• It settles losses on Actual Cash Value (ACV) = replacement cost minus depreciation.
• It provides no theft coverage, even after EC and V&MM are added.

Exam trap: "DP-1 = no theft" and "DP-1 = ACV" are the two most-tested DP-1 facts.

DP-2: The Broad Form

The DP-2 is an expanded named-perils form. It keeps the DP-1/EC perils and adds broad perils a maintenance-conscious landlord wants:

• Falling objects; weight of ice, snow, or sleet
• Accidental discharge or overflow of water or steam
• Sudden and accidental tearing, cracking, or bulging of a heating, air-conditioning, or water system
• Freezing of plumbing and appliances
• Sudden and accidental damage from artificially generated electrical current

DP-2 upgrades the building to replacement cost (subject to the 80% coinsurance condition) and makes theft available by endorsement.

DP-3: The Special Form

The DP-3 is the broadest and most frequently sold dwelling form. It insures the dwelling and other structures on an open-perils ("all-risk") basis — every cause of loss is covered unless specifically excluded. Personal property (Coverage C) stays named perils on the DP-2 broad list. This split mirrors the HO-3, with one decisive difference: the DP-3 carries no liability.

Open Perils vs. Named Perils: Who Proves What

The practical value of DP-3 is a shift in the burden of proof:

• On a named-perils form (DP-1, DP-2), the insured must show the loss came from a listed peril; an unnamed cause is simply not covered.
• On an open-perils form (DP-3 building), the insurer must prove the loss falls under an exclusion to deny it.

So a delivery truck clipping a porch, a falling limb, or odd accidental damage is covered on DP-3 unless excluded, but may fall off the DP-2 list and be denied.

Selection and Memory Hooks

• Cheapest fire-only protection on a low-value or near-vacant structure: DP-1.
• Solid named-perils including water and ice-weight: DP-2.
• Broadest building protection for a rental: DP-3.
• DP-1 = 1 cheap form, 0 theft, ACV. DP-3 = open on the building, named on the stuff. No DP form = liability.

Eligibility and When a Risk Lands in the Dwelling Program

The ISO dwelling program has specific eligibility limits the exam expects you to recognize. A risk qualifies when it is one- to four-family residential property, and the program does not require owner-occupancy the way the homeowners program does.

Exam trap: A four-plex is eligible for a DP form; a six-unit building is not and moves to a commercial or specialty program.

Read each question for occupancy clues. "Landlord," "vacant," "seasonal," or "not occupied by the owner" all point toward a DP form rather than an HO form. A homeowners policy is reserved for the owner who lives there as a primary residence.

Coverage Lettering Differs From Homeowners

The dwelling forms use the same A-through-E letters but assign loss-of-use differently than the homeowners forms, a frequent point of confusion:

Liability and medical payments, when added, become Coverage L and Coverage M, separate from the A-through-E coverages. The most tested distinction in the chapter is that the base dwelling form has no Coverage L or M until the Personal Liability Supplement or a separate policy is attached.