Dwelling Policy

What is a Dwelling Policy?

A dwelling policy is a type of insurance designed to protect residential structures that are not occupied by the owner. Typically used for rental properties, vacation homes, or unoccupied residences, a dwelling policy provides coverage against physical damage caused by events like fire, windstorms, or vandalism.

Understanding Dwelling Policies

Dwelling policies are tailored to meet the needs of property owners who may not live in the insured home. Unlike a standard homeowner's insurance policy, a dwelling policy generally does not include coverage for personal belongings or liability protection for occupants.

Common Uses of Dwelling Policies:

• Rental Properties: Landlords use dwelling policies to insure structures rented to tenants.
• Vacation Homes: Seasonal homes or cabins not occupied year-round are insured through dwelling policies.
• Unoccupied Homes: Homes undergoing renovations or awaiting sale.

Types of Coverage in Dwelling Policies

Dwelling policies come in different forms, each providing varying levels of coverage. The three primary forms are:

1. DP-1 (Basic Form):
   • Covers specific perils such as fire, wind, or vandalism.
   • Offers actual cash value (ACV) reimbursement, which deducts depreciation from claims.
2. DP-2 (Broad Form):
   • Expands coverage to include additional perils like falling objects or water damage from plumbing issues.
   • Often uses replacement cost value (RCV) for reimbursements.
3. DP-3 (Special Form):
   • Offers the most comprehensive coverage, including all risks except those explicitly excluded in the policy.
   • Typically insures properties at replacement cost.

Key Features of Dwelling Policies

• Structural Coverage:
  Includes protection for the main building and sometimes detached structures like garages or sheds.
• Named Perils Coverage:
  Unlike homeowner’s insurance, which may offer all-risk coverage, dwelling policies often cover only specified risks.
• Optional Add-Ons:
  Coverage for liability, loss of rental income, or personal property can be added to customize a policy.

Benefits of a Dwelling Policy

• Customizable Protection:
  Policyholders can tailor coverage based on the use and value of the property.
• Cost-Effective for Landlords:
  Provides sufficient protection without unnecessary personal property or liability coverage.
• Essential for Non-Owner Occupied Properties:
  Homeowner’s insurance may not cover homes rented to tenants or left vacant, making a dwelling policy crucial.

Related Terms and Comparisons

1. Homeowner’s Insurance vs. Dwelling Policy:
   Homeowner’s insurance includes liability and personal property coverage, whereas dwelling policies focus on structural protection.
2. Vacant Property Insurance:
   While similar, this policy specifically insures homes that are unoccupied for extended periods without tenants.
3. Landlord Insurance:
   A dwelling policy with additional liability and rental income loss coverage often referred to as landlord insurance.

FAQs on Dwelling Policies

Q: Can I use a dwelling policy for my primary residence?
A: No, dwelling policies are designed for properties not occupied by the owner. For a primary residence, a homeowner's insurance policy is more appropriate.

Q: Does a dwelling policy cover tenant belongings?
A: No, tenants must secure renters insurance to protect their personal belongings.

Q: What happens if my home is vacant for too long?
A: Many dwelling policies have restrictions on vacancy. If a property is vacant beyond the allowable period, coverage may be reduced or voided.