Conceptin Dwelling policy
Drill10 items
DP-1 vs DP-2 vs DP-3
The three ISO dwelling forms climb one ladder. The DP-1 covers basic perils and settles at actual cash value (ACV); the DP-2 adds broad named perils and replacement cost (RC); the DP-3 insures the dwelling on open perils while contents stay on broad named perils. None of them includes liability. The full program is on the dwelling policy page.
The dwelling ladder
DP-1, DP-2 and DP-3 by coverage
| Point | DP-1 | DP-2 | DP-3 | ≠ |
|---|---|---|---|---|
| Perils on the dwelling (A) | Basic; EC and VMM optional | Broad named perils | Open perils | differs |
| Perils on contents (C) | Basic; EC and VMM optional | Broad named perils | Broad named perils | differs |
| Loss settlement on A and B | ACV | RC if insured to at least 80% | RC if insured to at least 80% | differs |
| Other structures (B) | 10% of A, inside the A limit | 10% of A, additional | 10% of A, additional | differs |
| Fair rental value and ALE | D at 20% of A, reduces A; E by endorsement | D and E together 20% of A, additional | D and E together 20% of A, additional | differs |
| Property removed | 5 days | 30 days | 30 days | differs |
| Liability and medical payments | None; add the Personal Liability Supplement | None; add the Personal Liability Supplement | None; add the Personal Liability Supplement | same |
marks a row where at least one of the 3 differs from the others. After more than 60 consecutive days of vacancy, vandalism and malicious mischief (on the DP-1 only if it was bought) and glass breakage are no longer covered.
Who ends up on a dwelling form
Dwelling forms cover what the homeowners program does not fit: a house rented to tenants, a seasonal home, or a dwelling that fails homeowners eligibility. A landlord, an investor or a rental points to the dwelling program instead of the homeowners forms.
Inside the program, two facts separate the forms. The DP-1 is the only form that settles at ACV with no RC option in the base form, and the DP-3 is the only one with open perils anywhere, and only on the dwelling and other structures. The broad list the DP-2 and DP-3 share sits on top of the basic and extended perils and adds causes such as falling objects, freezing, and sudden tearing apart of a heating or water system.
Fair rental value is the other line the forms handle differently. On a DP-1 with $200,000 on Coverage A, up to $40,000 (20% of A) of lost rent is available, but every dollar paid comes out of that $200,000. On a DP-2 or DP-3 with the same Coverage A, fair rental value and additional living expense together add up to $40,000 on top of it. The DP-1 landlord cannot collect both full amounts.
One fire, two settlements
WorksheetActual cash value
Kitchen fire in a rental house: repair at RC $36,000, depreciation $9,000, $500 deductible, dwelling insured to 90% of RC
- Repair cost (RC)
- $36,000
- Depreciation
- $9,000
- Insurance to value
- 90% of RC
- Deductible
- $500
- ACV of the loss$36,000 − $9,000$27,000
- DP-1 pays at ACV$27,000 − $500$26,500
- DP-2 or DP-3 pays at RC (90% clears 80%)$36,000 − $500$35,500
What the form choice is worth here$9,000
Below the 80% line the DP-2 and DP-3 stop paying full RC. The valuation terms themselves are on ACV vs replacement cost.
Which DP form pays?
0 of 10 answered · 0 right
Ask two things in order: is the cause on that form's peril list (or simply not excluded, for the DP-3 dwelling), and is the damaged property the building or its contents.
Notes on each optionCommit to an answer first. The notes under the item then open on every option: what rules it in or out, and the one word that splits the runner-up from the key.
- Item 01
An investor wants the least expensive ISO dwelling form for a rental house and will accept actual cash value settlement with fire, lightning and internal explosion as the only base perils. Which form fits?
- AThe HO-8 is an owner-occupant homeowners form for older homes, not a landlord dwelling policy.
- BThe DP-2 covers broad named perils and can pay replacement cost, so it is more than the investor needs.
- CCorrect: the DP-1 basic form covers fire, lightning and internal explosion and settles at actual cash value.
- DThe DP-3 covers the dwelling on open perils, the broadest and costliest dwelling form.
- Item 02
Which dwelling form covers the dwelling for broad named perils and pays replacement cost if the dwelling is insured to at least 80% of its value?
- AExtended Coverage adds perils to the DP-1 but doesn't change its actual cash value settlement.
- BCorrect: the DP-2 broad form covers named broad perils and pays replacement cost when the dwelling is insured to at least 80%.
- CThe DP-3 covers the dwelling on an open-perils basis, not named perils.
- DThe DP-1 pays actual cash value and covers only basic perils.
- Item 03
Which peril is covered under a DP-2 but NOT under a DP-1 with Extended Coverage and vandalism added?
- AVandalism can be added to the DP-1 as a separate peril, so it isn't unique to the DP-2.
- BSmoke comes with Extended Coverage on the DP-1.
- CWindstorm or hail comes with Extended Coverage on the DP-1.
- DCorrect: weight of ice, snow or sleet is a broad-form peril, available on the DP-2 but not on the DP-1 even with EC and vandalism.
- Item 04
A property management firm insures its rental dwellings under the DP-3. Which statement about the DP-3 is CORRECT?
- AThis describes the DP-2, where both the dwelling and contents are named perils.
- BCorrect: the DP-3 covers the dwelling and other structures on open perils and personal property on broad named perils.
- CNeither the DP-3 nor the HO-3 makes personal property open perils.
- DThis reverses the DP-3: the dwelling is the open-perils part, contents are named perils.
- Item 05
Burglars break into a rental house insured under a DP-2. They damage the front door and steal the landlord's appliances. What will the DP-2 pay for?
- ATheft isn't a covered peril under the dwelling forms, so the appliances aren't paid without a theft endorsement.
- BThe door damage is covered, because damage by burglars is a DP-2 peril.
- C$1,500 is a homeowners special limit, and theft isn't covered on the DP-2 anyway.
- DCorrect: damage by burglars is a DP-2 peril, so the door is paid, but theft itself requires a theft endorsement.
- Item 06
Which form settles a loss to the building itself at actual cash value, even if the building is insured to 100% of its replacement cost?
- ACorrect: the DP-1 settles all losses, including the dwelling, at actual cash value regardless of how much insurance is carried.
- BThe HO-3 pays replacement cost on the dwelling when it is insured to at least 80% of replacement cost.
- CThe DP-2 pays replacement cost on the dwelling when it is insured to at least 80% of replacement cost.
- DThe DP-3 pays replacement cost on the dwelling when it is insured to at least 80% of replacement cost.
- Item 07
A water pipe inside a rental house suddenly bursts and soaks the floors. Which dwelling forms would cover this damage?
- AThe DP-1 covers basic perils plus optional extended coverage and vandalism, none of which is water discharge.
- BCorrect: sudden and accidental discharge of water from plumbing is covered by the DP-2 as a broad peril and by the DP-3.
- COnly flood, surface water and sewer backup are excluded; a sudden pipe burst isn't.
- D'Only' gives it away: the DP-2 also lists accidental discharge of water as a broad peril.
- Item 08
Which additional coverage is found in the DP-2 and DP-3 but NOT in the DP-1?
- AThe DP-1 includes property removed coverage, though for only 5 days instead of 30.
- BThe DP-1 includes fair rental value, so it isn't unique to the DP-2 and DP-3.
- CCorrect: trees, shrubs and plants (5% of Coverage A, up to $500 per tree) is an additional coverage of the DP-2 and DP-3 only.
- DThe DP-1 includes other structures coverage, although using it reduces Coverage A.
- Item 09
The weight of heavy snow collapses both the roof of the detached garage and the wooden fence at a rental house insured under a DP-2. What is covered?
- AThe fence is one of the items the weight of ice, snow or sleet peril specifically leaves out.
- BWeight of ice, snow or sleet is a DP-2 broad peril.
- CThis reverses the rule: the fence is the excluded item, and the garage roof is covered.
- DCorrect: weight of snow is a DP-2 peril and covers the garage roof, but the peril excludes fences, awnings, patios and similar items.
- Item 10
During a riot, rioters smash the windows and damage the walls of a rental house insured under a DP-1 with extended coverage but without vandalism and malicious mischief. How is the damage treated?
- ACorrect: extended coverage adds riot or civil commotion to the DP-1, so damage done by rioters is covered.
- BThe DP-1 with extended coverage already includes the riot peril.
- CVandalism coverage isn't needed, because the damage was done during a riot, a peril extended coverage includes.
- D'Fire only' is wrong; the DP-1 adds riot through extended coverage.
Words in the stem that point to a form
- Actual cash value with no endorsement mentioned: DP-1.
- Replacement cost and an 80% insurance-to-value test: DP-2 or DP-3.
- Open perils or special form on the building: DP-3.
- Extended coverage or VMM bought as an add-on: DP-1.
- Open perils on contents: no DP form; the DP-3 keeps personal property on broad named perils.
- Trees, shrubs and plants as an additional coverage (5% of A, $500 per tree): DP-2 or DP-3 only.
- Vacant more than 60 consecutive days: vandalism and malicious mischief (on the DP-1 only if it was bought) and glass breakage are out.