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Personal - Dwelling Fire Policy

What is a Dwelling Fire policy?

A Dwelling Fire Policy is a type of insurance policy designed to protect properties that are primarily used as residences, but are not necessarily owner-occupied or used as traditional
single-family homes.

This policy provides coverage for the building (property) against damage caused by fire, lightning, or other specified risks, such as storms, vandalism, or other natural disasters (depending on the policy).

Some Dwelling Fire policies may also include coverage for personal property or belongings located within the property, but this is usually optional coverage or not included in the basic coverage.

Some policies may offer limited liability coverage if someone is injured on the property. However, this coverage is typically less comprehensive than a standard homeowners policy. General liability coverage is usually available as an additional policy.

 

The three main types of Dwelling Fire insurance policies are:

1.  DP-1 (Basic Form):
  • This is the most basic form of coverage. It usually covers only fire, lightning, and internal explosion (though you can add other perils with endorsements).
  • It often provides actual cash value (ACV) for the property, meaning depreciation
    is taken into account when the payout is made.
2.  DP-2 (Broad Form):
  • This form expands coverage beyond just fire and lightning. It may include perils like windstorm, hail, vandalism, and civil commotion, among others.
  • Coverage is typically replacement cost (RC), meaning the insurance will cover the cost
    to rebuild or repair the property without factoring in depreciation.
3.  DP-3 (Special Form):
  • This is the most comprehensive Dwelling Fire policy. It typically covers all risks of loss except for those explicitly excluded in the policy (like flooding or earthquakes).
  • Like DP-2, it generally provides coverage based on replacement cost.


A Dwelling Fire insurance policy will be suitable for:

  • Landlords: Individuals who rent out properties, whether long-term or short-term
    (e.g., vacation homes or Airbnb properties).

  • Property Investors: Those who own rental properties or properties intended to be sold later (like fix-and-flip properties).

  • Second Homeowners: People who own vacation homes or secondary residences but don’t live there full-time.

  • Real Estate Agents or Managers: If managing properties for clients, a Dwelling Fire policy may be needed for those properties.

This type of policy may not cover:

  • Flooding or Earthquakes: These are typically excluded from Dwelling Fire policies,
    and separate insurance policies would be needed for those types of natural disasters.

  • Personal Property: Basic Dwelling Fire policies may not cover personal belongings within the property. Coverage for personal property may need to be added as a rider.

  • General Liability: Unless specifically included, liability coverage (like bodily injury
    or property damage to others) is not typically included, so landlords may need separate landlord liability insurance.

Benefits of having building fire insurance:

  • For Non-Owner-Occupied Properties: If you rent or lease out a property, a Dwelling Fire Policy is often more appropriate than a traditional homeowner's insurance policy, which assumes the property is owner-occupied.

  • Lower Premiums: These policies often have lower premiums compared to regular homeowners insurance because they are designed for non-owner-occupied properties.