DP-1 vs DP-3: Which Dwelling Fire Policy Does Your Rental Need?

The short answer: a DP-1 covers a short list of named perils and pays claims at depreciated value, which makes it the cheapest option and the standard choice for a vacant property. A DP-3 covers anything not specifically excluded and pays to rebuild at replacement cost, which makes it the stronger policy and the standard choice for an occupied rental. There is a middle option too, the DP-2, used when a DP-3 is not available. Here is what actually separates the three, and which one belongs on your South Carolina rental.

What is the actual structural difference?

It comes down to how each form decides what is covered. A DP-1 lists the perils it covers, commonly nine or ten of them: fire, lightning, windstorm and hail, smoke, explosion, riot, vehicles, aircraft, and volcanic eruption. If your loss is not caused by something on that list, the policy does not pay, no matter how similar it looks to a covered cause.

A DP-3 flips that logic. It covers the dwelling against anything that is not specifically excluded, rather than listing what is included. Water damage, falling objects, and other causes a named-peril form would need to spell out are simply covered, unless the policy says otherwise. That shift, from a list of what is in to a list of what is out, is the real difference between DP-1 and DP-3. It comes down to who has to prove what when a claim gets filed.

How does each form settle a claim?

This is the second big split, separate from which perils are covered. A DP-1 settles at actual cash value, meaning the payout reflects the depreciated worth of what was damaged, not the cost to replace it. A twenty-year-old roof does not get paid out like a new one.

A DP-3 settles the dwelling at replacement cost, meaning it pays what it actually costs to rebuild, provided you have kept your coverage limit at roughly 80 percent of the home’s replacement value. That 80 percent requirement, often called coinsurance, is standard on replacement-cost forms and worth checking at every renewal as rebuilding costs rise. On both forms, contents and appliances you own at the property still settle at actual cash value unless you add a replacement cost endorsement.

Where does the DP-2 fit in?

The DP-2, or broad form, is a genuine middle tier, not just a DP-1 with a couple of extra items. It is still named-perils, but the list is longer, commonly 17 or 18 perils, adding things like falling objects, weight of ice and snow, and accidental water discharge. Like a DP-3, it typically settles the dwelling at replacement cost under the same coinsurance rule. A DP-2 shows up when a property does not qualify for a DP-3, maybe an older roof or a claim on the record, but a bare DP-1 feels too thin for an occupied house. Worth asking about when a DP-3 quote comes back restricted.

Which one does your rental actually need?

For an occupied, actively rented house, a DP-3 is the standard choice, and for good reason. It matches the kind of protection a homeowner would carry on their own house, plus the landlord-specific coverage like loss of rents that a homeowners policy never had. See our landlord insurance cost guide for what that typically runs.

For a vacant property, the calculation flips. Carriers see empty homes as carrying two to three times the loss frequency of occupied ones, mainly theft, vandalism, and water damage nobody catches in time, and open-perils coverage on a vacant house often becomes unavailable or priced out of reach. A DP-1 built for vacant property is the standard, sensible vehicle here, not a downgrade.

The vacancy clause catches more landlords than the policy choice does

Even a DP-3 written for an occupied rental is not permanently open-perils. Nearly every dwelling and homeowners form includes a vacancy clause, and it usually triggers once a property sits unoccupied and substantially empty of furnishings for 30 to 60 consecutive days. Once triggered, coverage for vandalism, glass breakage, water damage, and theft is commonly excluded, and other losses can be paid at a reduced amount.

This is the gap that catches landlords who assume their DP-3 just keeps working while a house sits empty between tenants or during a renovation. The fix is simple: call before a property crosses that line, not after something happens, so we can move it to a vacant dwelling policy, typically a DP-1, while it needs one. Considering a short-term rental instead of leaving the property empty? Read our short-term rental insurance guide first, since that changes the coverage question entirely.

If you live in the home yourself, this comparison is not the one you need. Our HO3 vs HO5 guide covers the equivalent decision for a homeowners policy.

Frequently asked questions

Is a DP-3 the same as a homeowners policy? Close, but not the same policy. A DP-3 covers the dwelling on the same open-perils, replacement-cost basis a homeowners policy does, and that similarity is exactly the point. But a DP-3 is written for a landlord’s risk, not an owner-occupant’s, and it adds coverage homeowners policies do not carry, like loss of rents. Putting a homeowners policy on a tenant-occupied house instead of a dwelling fire form is a real problem, since a claim can be denied over occupancy.

What does a DP-1 actually cover? A short, named list of perils: fire, lightning, windstorm and hail, smoke, explosion, riot, vehicles, aircraft, and volcanic eruption, depending on the form. If the cause of loss is not on that list, the DP-1 does not pay, and payouts are at actual cash value, meaning depreciation comes off the check. It is the cheapest of the three dwelling forms and the most limited.

When does a DP-1 make sense? Mainly on a vacant property. Once a rental sits empty, open-peril coverage like a DP-3 often becomes unavailable or gets restricted anyway, so a DP-1 built for vacant property is usually the right vehicle rather than a compromise. It can also fit a lower-value property where a bare-bones policy is a reasonable trade for a lower premium.

What happens if my rental sits empty on a DP-3? Most dwelling and homeowners forms include a vacancy clause that kicks in after 30 to 60 consecutive days with nobody living there and the place substantially empty of furnishings. Once it triggers, coverage for things like vandalism, theft, glass breakage, and water damage is commonly excluded outright, and other covered losses can be reduced. Call before a property sits empty that long so we can move it to the right policy first.

Does a DP-3 cover my tenant’s belongings? No, never. A DP-3 covers the structure and anything you own at the property, like an appliance you supply. Your tenant’s furniture, electronics, and clothes are their property, and only their own renters insurance covers those. That is exactly why a lease should require tenants to carry a renters policy.

Not sure which form your rental is actually on? Call or text 803-848-0089 and a local agent at Griffin Insurance will read your declarations page and tell you straight, no charge.