3.2 Dwelling Policy Forms (DP-1, DP-2, DP-3)

The Three Forms at a Glance

ISO publishes three dwelling forms. Coverage and premium rise across the series; none includes liability.

DP-1: Basic Form

The DP-1 is the narrowest, least expensive form. In its core state it insures only fire, lightning, and internal explosion. The other common perils are added by attaching the Extended Coverage (EC) group and Vandalism & Malicious Mischief (V&MM):

• EC perils (memorize as WC SHAVVER-style list): Windstorm/hail, Civil commotion/riot, Smoke, Hail (part of windstorm), Aircraft, Vehicles, Volcanic eruption, Explosion, Riot
• V&MM must be added separately

Key DP-1 facts:

• Pays on Actual Cash Value (ACV) = replacement cost minus depreciation
• No theft coverage even with EC and V&MM
• Windstorm/hail covers exterior damage; interior is covered only if wind first creates an opening

Exam tip: "DP-1 = no theft" and "DP-1 = ACV" are the two facts most often tested about the Basic Form.

DP-2: Broad Form

The DP-2 is an expanded named-perils form. It includes the DP-1/EC perils PLUS broad perils such as:

• Falling objects
• Weight of ice, snow, or sleet
• Accidental discharge or overflow of water or steam
• Sudden and accidental tearing apart, cracking, burning, or bulging of a heating/AC/water system
• Freezing of plumbing, heating, AC, or appliances
• Sudden and accidental damage from artificially generated electrical current

DP-2 also upgrades loss settlement to replacement cost on the building (subject to the 80% coinsurance condition) and adds theft by endorsement options. It is a common landlord choice when open perils are not required.

DP-3: Special Form

The DP-3 is the broadest dwelling form and the most frequently sold to landlords. 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) remains named perils using the DP-2 broad list.

DP-3 vs. HO-3

Named-Perils Comparison

Decision Guide

• Need the cheapest possible fire-only protection on a low-value or vacant structure → DP-1
• Need solid named-perils coverage including water and weight-of-ice losses → DP-2
• Want the broadest building protection (any non-excluded cause) for a rental → DP-3
• In every case, add the Personal Liability Supplement if the landlord wants liability protection.

Open Perils vs. Named Perils — Who Carries the Burden of Proof

The difference between DP-2 and DP-3 is more than a longer peril list; it shifts the burden of proof in a claim:

• On a named-perils form (DP-1, DP-2), the insured must show the loss was caused by a listed peril. A loss from an unnamed cause is simply not covered.
• On an open-perils form (DP-3 dwelling/other structures), the insurer must prove the loss falls under an exclusion to deny it. Anything not excluded is covered.

This is why DP-3 is so much more valuable to a landlord facing an unusual loss — say, a delivery truck backing into a porch, a falling tree limb, or accidental cosmetic damage. On DP-3 those are covered unless excluded; on DP-2 the adjuster looks for them on the named list and, if absent, denies.

The Special-Form Carve-Backs on DP-3

Even on the open-perils DP-3, personal property reverts to broad named perils and a handful of special limitations apply to the dwelling. Theft of building materials from an unoccupied or under-construction dwelling, and certain water-related and freezing losses, are addressed with conditions rather than full coverage. Candidates should remember the headline split:

Forms vs. Endorsements — A Common Mix-Up

Do not confuse a form (DP-1/2/3, which sets the breadth of perils) with an endorsement (which modifies the chosen form). Theft on a DP-1, broadened theft on a tenant-occupied dwelling, ordinance-or-law cost, and personal liability are all endorsements layered onto whichever base form was selected. On the exam, when a question says "by endorsement," it is signaling that the base form alone would not respond.

Memory Hooks

• DP-1 = "1 cheap form, 0 theft, ACV."
• DP-2 = "2 = broad, adds theft + water + ice, replacement cost."
• DP-3 = "3 = open on the building, named on the stuff."
• No DP form = liability. Liability is always a separate add-on.