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

The Dwelling Program

A dwelling policy is monoline property insurance for one-to-four-family residences written on an Insurance Services Office (ISO) dwelling form. Producers call these "dwelling fire" policies because the program descends from the old Standard Fire Policy (SFP) and its 165-line jacket. The program exists to cover risks the homeowners (HO) program will not accept.

Expect exam questions on these eligible exposures:

• Rental dwellings held by a landlord who does not occupy the building
• Seasonal or secondary homes (lake cabins, vacation cottages)
• Owner-occupants who fail HO underwriting (older homes, low protection class, prior losses)
• Dwellings under construction or renovation

The key trap: the base DP form is property-only. There is no liability (Coverage L) or medical payments (Coverage M) unless you attach an endorsement.

The Three Forms at a Glance

ISO publishes three current dwelling forms. Coverage and premium rise across the series; none includes liability in its core state.

Memorize the loss-settlement column: only the DP-1 pays ACV; DP-2 and DP-3 pay replacement cost on the building (subject to the 80% coinsurance/replacement-cost condition). Personal property is always ACV on every form.

DP-1 Basic Form (DP 00 01)

The DP-1 is the narrowest and cheapest form. In its core state it insures only fire, lightning, and internal explosion. Adding the Extended Coverage (EC) perils brings in Windstorm/hail, Civil commotion/riot, Aircraft, Vehicles, Smoke, Volcanic eruption, and Explosion — the WCAVSVE mnemonic. Vandalism & malicious mischief (V&MM) is a separate add-on requiring the dwelling not be vacant beyond 60 consecutive days.

Unique DP-1 trap: the standard fire policy heritage means the DP-1 still uses the pro-rata / ACV logic and offers no replacement cost. A common exam item asks which form a budget landlord on a low-value rental would choose — DP-1.

DP-2 Broad and DP-3 Special

The DP-2 (Broad Form) upgrades both the building and contents to a broad named-perils list — adding burglary damage, falling objects, weight of ice/snow/sleet, accidental discharge of water, freezing, and electrical surge. It also unlocks replacement-cost building settlement and several Other Coverages.

The DP-3 (Special Form) insures the dwelling and other structures on an open-perils (all-risk) basis: covered unless specifically excluded. The catch tested constantly: on the DP-3, Coverage C personal property reverts to the DP-2 broad named-perils list — only the structures get open perils. Open perils shifts the burden of proof to the insurer to show an exclusion applies.

How Dwelling Differs From Homeowners

The exam repeatedly contrasts the dwelling (DP) program with the homeowners (HO) program. Three differences drive most questions:

The Standard Fire Policy Heritage

The dwelling program descends from the 1943 New York Standard Fire Policy (SFP), the 165-line statutory contract that still anchors fire-insurance law. From the SFP the DP forms inherit core concepts the exam loves: the concealment/fraud clause, insurable interest, the pro-rata liability (other-insurance) clause, and the suit / proof-of-loss time limits. When a question references the 165-line standard fire policy, it is signaling the dwelling lineage.

Coverages on the Dwelling Forms

Every DP form arranges property coverage into the same letter scheme:

• Coverage A - Dwelling
• Coverage B - Other Structures
• Coverage C - Personal Property
• Coverage D - Fair Rental Value
• Coverage E - Additional Living Expense (broad/special forms)

A landlord typically buys A, B, and D (to replace lost rent) and skips C. An owner-occupant of a DP risk would add C and ALE.

Why a Risk Lands in the Dwelling Program

Underwriters route a risk to DP rather than HO when the property is non-owner-occupied, seasonal, under construction, in a low protection class, or carrying prior losses that fail HO guidelines. The base form is property-only; the producer must remember to add the Personal Liability (DL 24 01) and Premises Liability endorsements, plus theft coverage, to approximate homeowners protection. Forgetting the liability endorsement on an owner-occupied DP is a classic errors-and-omissions exposure the exam likes to flag.

Dwelling Liability and Theft Endorsements in Practice

Because the base DP is property-only, the producer's checklist for an owner-occupied dwelling-fire risk is to add theft (broad or limited) and personal liability/premises liability to approximate homeowners protection. For a landlord, the priority instead is fair rental value and premises liability for tenant injuries, while theft and Coverage C are usually unnecessary because the landlord stores no contents there.

Matching the right endorsement package to the occupancy - owner-occupant vs. landlord vs. seasonal - is a recurring application item, and forgetting liability on an owner-occupied DP is the classic producer errors-and-omissions exposure tested here.