DP-2 policy
Also known as: dwelling broad form, dp-2 broad form
A DP-2 policy is the broad form of the dwelling policy, covering a home and its contents against a named list of perils. It sits between the basic DP-1 and the open-peril DP-3, and typically settles building losses on a replacement cost basis.
Dwelling policies (the DP series) insure residential property that does not qualify for a homeowners policy — rental houses, seasonal dwellings, and homes occupied by someone other than the owner. Unlike a homeowners form, a dwelling policy contains no built-in liability or theft coverage; those are added by endorsement. The DP-2, or broad form, is the middle tier of the series.
The DP-2 is a named perils form, meaning a loss is covered only if it is caused by a peril listed in the policy. It picks up the DP-1 basic perils — fire, lightning, and internal explosion — along with the extended coverage group of windstorm, hail, explosion, riot and civil commotion, aircraft, vehicles, smoke, and volcanic eruption, includes vandalism and malicious mischief (which is optional under the DP-1), and adds broad perils such as damage from falling objects, weight of ice and snow, accidental discharge of water or steam from plumbing or appliances, freezing of plumbing systems, and sudden and accidental damage from artificially generated electrical current.
Two other differences matter. The DP-2 generally pays building losses at replacement cost when the required coinsurance percentage is met, while the DP-1 pays actual cash value. The DP-2 also includes additional coverages the basic form lacks or limits, such as fair rental value and additional living expense. Above it, the DP-3 special form covers the dwelling on an open-peril basis — everything except what is specifically excluded — with contents still on a named perils basis.
Personal lines, property, and property and casualty licensing exams test the dwelling series alongside homeowners forms. Know the DP-1 / DP-2 / DP-3 ladder, which perils belong to basic versus broad, that DP-2 building losses settle at replacement cost, and that liability and theft must be added to any dwelling policy by endorsement.
Key takeaways
- The DP-2 is the broad form dwelling policy, covering property against an expanded list of named perils.
- It adds broad perils such as weight of ice and snow, falling objects, accidental water discharge, and electrical damage to the DP-1 basic perils.
- Building losses under a DP-2 are generally settled at replacement cost, unlike the DP-1's actual cash value.
- Dwelling policies exclude liability and theft coverage unless added by endorsement.
- The DP-3 above it covers the dwelling on an open-peril basis rather than by named perils.