Landlord insurance guide
Dwelling fire policies: how DP-1, DP-2, and DP-3 forms work
Dwelling fire policies are the standard way to insure a residence that the owner does not live in. This page explains the three forms and what NAIC data says about their cost.
What a dwelling fire policy is
A dwelling fire policy, often shortened to DP, insures a one-to-four-family residential building. Unlike a homeowners policy, it is not a package: personal property, liability, and theft are typically optional add-ons. That flexibility is why landlords use it. You buy coverage for the building and the rental income, then add what fits your situation.
The coverage parts
| Coverage | What it protects |
|---|---|
| A — Dwelling | The building and attached structures |
| B — Other structures | Detached garages, fences, sheds |
| C — Personal property | Owner's property kept at the rental, when chosen |
| D — Fair rental value | Lost rent while the unit is unfit to live in |
| E — Additional living expense | Mostly relevant if the owner lives there |
| Liability / medical payments | Usually added by endorsement or a separate coverage part |
DP-1 basic form
DP-1 names a short list of perils, starting with fire, lightning, and internal explosion, with extended coverage for windstorm, hail, smoke, vehicles, aircraft, riot, and volcanic eruption. Vandalism is often optional. Losses are commonly paid at actual cash value. It suits lower-value or older properties and some vacant homes.
DP-2 broad form
DP-2 keeps a named-perils approach but adds burglary damage, falling objects, weight of ice, snow, or sleet, accidental discharge of water or steam, sudden cracking of heating systems, freezing of plumbing, and sudden electrical damage. Building losses are often settled at replacement cost when insurance-to-value conditions are met.
DP-3 special form
DP-3 covers the dwelling and other structures against any direct physical loss that is not excluded. Exclusions typically include flood, earth movement, wear and tear, neglect, intentional loss, and certain water and mold scenarios. Personal property under DP-3, when included, is usually still named-perils. Most financed rentals use DP-3.
What NAIC data shows about dwelling fire premiums
The National Association of Insurance Commissioners publishes average premiums by policy form. In its report covering 2023 data, the countrywide average dwelling-fire (DW) premium was $1,019, compared with $1,737 for the HO-3 homeowners form. Averages rise with the amount of insurance: countrywide DW policies averaged $583 under $150,000 of coverage and $1,957 at $500,000 to $599,999.
Two cautions. First, the NAIC's DW figures are collected for one-family, owner-occupied, non-seasonal buildings, so they describe the dwelling form, not landlord risks specifically. Second, the DW category mixes DP-1, DP-2, and DP-3 policies. Treat these numbers as context, not a quote. State figures appear on our cost by state page.
Choosing between forms
- Choose DP-3 for a financed, well-maintained rental where you want the broadest building coverage.
- Consider DP-2 if DP-3 is unavailable or too costly but you want water and freeze perils.
- Use DP-1 mainly for lower-value, older, or vacant properties, or where nothing broader is offered.
- On any form, confirm liability, loss-of-rents, and the loss settlement basis in writing.
Related guides
- Rental property insurance
- Dwelling fire policy (DP-1/2/3)
- Landlord vs. homeowners insurance
- Landlord insurance cost by state
- Duplex & fourplex landlord insurance
Service-area states
Frequently asked questions
Why is it called a dwelling fire policy?
The form grew out of basic fire insurance for houses. Modern versions cover far more than fire, but the industry still calls the whole family of forms dwelling fire, or DP forms.
Is a dwelling fire policy only for rentals?
No. Dwelling forms also insure vacant homes, seasonal homes, and homes that do not qualify for homeowners coverage. Rentals are the most common use.
Does a dwelling fire policy include liability?
Not always. Premises liability is often added by endorsement or a separate liability coverage part, so confirm that it is on your quote.
Last updated October 15, 2026. Sources and method: how we research.