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

What the Dwelling Program Insures

The Insurance Services Office (ISO) Dwelling Property program covers residences that do not qualify for a Homeowners policy. It is engineered for non-owner-occupied rentals, seasonal and secondary homes, dwellings housing up to four families, and homes that fail Homeowners underwriting because they are older, vacant, under construction, or owner-occupied but lower in value.

Unlike Homeowners forms, no Dwelling form contains personal liability or medical payments. Liability must always be added by endorsement. This is the single most tested structural fact in the program, so anchor it before anything else. The Dwelling forms are also monoline property contracts: they pay for direct and indirect (time-element) property loss, nothing more.

Eligibility is broad. A dwelling owner who lives in the home, a landlord renting to tenants, and the owner of a beach cottage used three months a year can all be written on a DP form. What differs is which form and what endorsements attach.

The Three Forms at a Glance

There are three editions, and coverage broadens (with premium) as you climb the ladder. Memorize this table cold; examiners draw two or three questions straight from it.

DP-1 Basic Form (DP 00 01)

The Basic Form is the narrowest and cheapest. In its core state it covers only fire, lightning, and internal explosion. The broader Extended Coverage (EC) group and Vandalism and Malicious Mischief (V&MM) are added by selection, not built in.

• EC perils add: windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, and volcanic eruption.
• No theft coverage exists on the DP-1 even after adding EC and V&MM; theft simply is not available on the Basic Form.
• Building losses settle on Actual Cash Value — replacement cost minus depreciation for age and wear.

The two facts examiners hammer are "DP-1 equals ACV" and "DP-1 equals no theft." A third frequent trap: on the DP-1, windstorm to the interior is covered only if wind first creates an exterior opening.

DP-2 Broad Form (DP 00 02)

The Broad Form is an expanded named-perils contract. It includes everything in DP-1/EC/V&MM and adds broad perils such as falling objects; weight of ice, snow, or sleet; accidental discharge of water or steam; freezing of plumbing; sudden tearing apart of a heating system; and electrical injury (artificially generated current) to appliances. Building losses settle at Replacement Cost, subject to the 80% coinsurance test. The DP-2 mirrors the broad Homeowners peril menu and adds optional theft.

DP-3 Special Form (DP 00 03)

The Special Form is the broadest and most popular. The dwelling and other structures are insured on an open-perils (all-risk) basis — covered for any cause of loss except those specifically excluded, which shifts the burden of proof to the insurer. Personal property remains on broad named perils (the DP-2 list), never open perils. A landlord who wants "cover anything unless excluded" on the rental building needs the DP-3. Because the burden flips, DP-3 claims are easier for insureds to win.

Common Confusion Points

• A higher form number does not mean broader; DP-3 (Special) is broadest, not DP-2.
• Coverage C contents never reach open perils, even on the DP-3.
• Theft is excluded on DP-1, available by endorsement on DP-2 and DP-3.
• DP forms are not interchangeable with HO forms — a DP has no liability built in and must be endorsed for it.
• All three forms can write owner-occupied or tenant-occupied dwellings; occupancy does not pick the form, peril breadth does.

Choosing the Right Form: A Decision Walkthrough

Producers select a form by matching the client's risk appetite and budget to peril breadth:

1. Budget-driven landlord, fire-only concern → DP-1 with EC added; cheapest, ACV settlement, accept no theft.
2. Owner wanting broad named perils and replacement cost → DP-2; predictable list of covered causes, theft can be endorsed.
3. Owner wanting maximum protection → DP-3; open perils on the building, easiest claims, highest premium.

A frequent question stem describes a client and asks which form fits. The trigger words are "any cause unless excluded" (DP-3), "specific broad list" (DP-2), and "least expensive / fire and lightning" (DP-1).

Eligibility Limits and Term

The Dwelling program writes dwellings of no more than four units and limited incidental business or rental occupancy. A small office or studio in the home may be permitted; a full storefront is not. Policies are typically issued for one year and can include incidental occupancies by endorsement, but a structure used primarily for business belongs on a commercial form, not a DP.