5.1 Dwelling Policy Forms (DP-1 Basic, DP-2 Broad, DP-3 Special): Eligibility, Perils & Coverages A-E
Key Takeaways
- The ISO dwelling program insures one- to four-family dwellings that do not qualify for, or are not written on, a homeowners form — most often non-owner-occupied rental property.
- DP-1 Basic covers fire, lightning, and internal explosion, with extended coverage (windstorm, hail, explosion, riot, aircraft, vehicles, smoke, volcanic eruption) and vandalism available as options.
- DP-2 Broad names additional perils such as burglar damage, falling objects, weight of ice/snow/sleet, accidental water discharge, freezing, and artificially generated electrical current; DP-3 insures the dwelling on an open-perils basis.
- Dwelling forms do not include theft coverage or liability coverage; theft is added by endorsement and liability by a separate personal liability supplement.
- DP-1 settles building losses at actual cash value, while DP-2 and DP-3 pay replacement cost on the dwelling when insurance is at least 80% of full replacement cost.
Why the Dwelling Program Matters to a New York Public Adjuster
New York's housing stock includes a large inventory of investor-owned one- to four-family rentals: two-family houses in Queens and Brooklyn, upstate multifamily properties, and seasonal homes. These are usually insured on the ISO Dwelling Policy (DP) program, not homeowners forms. The dwelling domain is 10% of the Series 17-62 examination (about six questions). A public adjuster who assumes "it's just like a homeowners policy" will miss the differences that decide a landlord's claim: no theft coverage, no liability section, narrower perils, and actual cash value settlement on the Basic form.
Eligibility
Dwelling forms insure:
- One- to four-family dwellings, owner-occupied or not, including rental dwellings and some seasonal dwellings;
- Dwellings under construction (see the Dwelling Under Construction endorsement in Section 5.2);
- Property that does not qualify for a homeowners form.
There is no Section II liability in the dwelling forms. A landlord needs a separate personal liability supplement or a commercial liability policy.
Comparing DP-1, DP-2, and DP-3
| Feature | DP-1 Basic (DP 00 01) | DP-2 Broad (DP 00 02) | DP-3 Special (DP 00 03) |
|---|---|---|---|
| Perils: dwelling (A) and other structures (B) | Named: fire, lightning, internal explosion; extended coverage and vandalism optional | Named broad perils (below) | Open perils, subject to exclusions |
| Perils: personal property (C) | Same as A/B | Named broad perils | Named broad perils |
| Building loss settlement | Actual cash value | Replacement cost if insured to at least 80% of replacement cost | Replacement cost if insured to at least 80% |
| Coverage D Fair Rental Value | Included | Included | Included |
| Coverage E Additional Living Expense | Not included (added by endorsement) | Included | Included |
| Theft | Not covered (endorsement) | Not covered (endorsement) | Not covered (endorsement) |
DP-1 Perils in Detail
- Base perils: fire or lightning, and internal explosion (explosion inside the dwelling or other structure).
- Extended Coverage (EC), if purchased: windstorm or hail, explosion (broader than internal explosion), riot or civil commotion, aircraft, vehicles, smoke, and volcanic eruption.
- Vandalism or malicious mischief (VMM), if purchased. Like other dwelling vandalism coverage, it does not apply once the dwelling has been vacant more than 60 consecutive days before the loss.
DP-2 Broad Perils
DP-2 includes the DP-1 perils with EC and VMM, plus:
- Damage by burglars (damage to the building, not theft of property);
- Falling objects;
- Weight of ice, snow, or sleet;
- Accidental discharge or overflow of water or steam from plumbing, heating, air conditioning, sprinkler systems, or household appliances;
- Sudden and accidental tearing apart, cracking, burning, or bulging of heating, air conditioning, sprinkler, or water-heating systems;
- Freezing of plumbing and related systems (subject to heat-maintenance conditions);
- Sudden and accidental damage from artificially generated electrical current.
DP-3 Special
DP-3 covers the dwelling and other structures against risk of direct physical loss unless excluded. The exclusions resemble the homeowners Section I exclusions: wear and tear, mechanical breakdown, settling, freezing when heat isn't maintained, and the general exclusions in Section 5.2. Personal property remains on the broad named-peril list.
Coverages A Through E
| Coverage | What it insures | Adjusting notes |
|---|---|---|
| A – Dwelling | The dwelling on the described location, attached structures, and building equipment and outdoor equipment used to service the premises | The core building claim; replacement cost on DP-2/DP-3 depends on the 80% test |
| B – Other Structures | Structures separated from the dwelling by clear space | In DP-1, the insured may use up to 10% of the Coverage A limit for other structures, and payment reduces Coverage A for that loss |
| C – Personal Property | Household and personal property usual to a dwelling, owned or used by an insured, while at the described location | For a rental, often only the landlord's furnishings and appliances; tenants need their own policy |
| D – Fair Rental Value | Rent lost when the rented part of the dwelling is unfit for use because of a covered loss, less expenses that do not continue | The main time-element coverage for landlords |
| E – Additional Living Expense | The necessary increase in living expenses when the part of the dwelling where the insured resides is uninhabitable | DP-2 and DP-3 only unless added to DP-1 by endorsement (DP 04 14) |
Principal Other Coverages
- Property removed: covers property against direct loss from any cause while being removed from premises endangered by a covered peril. On DP-1 the coverage lasts no more than 5 days while the property is removed, the same five-day rule as the Standard Fire Policy.
- Debris removal: reasonable expense to remove debris of covered property damaged by a covered peril.
- Reasonable repairs: necessary measures to protect covered property from further damage.
- Improvements, alterations, and additions: a tenant insured can apply part of Coverage C to improvements it made to a rented building.
- Worldwide coverage: a small portion of Coverage C applies to property away from the described location.
- DP-2 and DP-3 add trees, shrubs, and plants (limited named perils; no windstorm), fire department service charge, collapse, glass or safety glazing material, and ordinance or law coverage. On DP-1, several of these are available only by endorsement, such as DP 04 17 for trees and shrubs and DP 04 74 for ordinance or law.
Scenario
A landlord's two-family house (non-owner-occupied) is insured on a DP-1 with EC. A windstorm tears off part of the roof, and the rain that follows soaks a tenant's apartment and the landlord's appliances. The roof damage is covered because windstorm is an EC peril. Because DP-1 settles at actual cash value, the payment is net of depreciation. The lost rent is recoverable under Coverage D. The tenant's own furniture belongs to the tenant, so it is a claim under the tenant's HO-4, not the landlord's DP-1.
A landlord insures a non-owner-occupied two-family dwelling on an unendorsed DP-1 Basic form with Extended Coverage. Which loss is covered?
How does the DP-1 Basic form settle a covered loss to the dwelling (Coverage A)?
Under DP-1, property removed from premises endangered by a covered peril is protected against direct loss from any cause for how long while it is removed?