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5.0 Dwelling Policy

Learning Objectives​

Upon completing this chapter, you should be able to:

  1. Explain the purpose of a Dwelling policy and identify the properties and applicants that meet its eligibility requirements.
  2. Identify the coverages available under a Dwelling policy and describe the limit of liability that applies to each coverage.
  3. Compare the DP–1, DP–2, and DP–3 coverage forms based on the perils insured against and the methods used to determine loss payments.
  4. Recognize and explain the Other Coverages included in Dwelling policies.
  5. Identify and interpret the Conditions contained in the Dwelling coverage forms.
  6. Apply the General Exclusions of a Dwelling policy to determine when coverage does not apply.
  7. Describe the common endorsements that may be added to modify or expand Dwelling policy coverage.

Overview​

Although Homeowners insurance is widely recognized, Dwelling insurance is less familiar to many consumers. The Dwelling Program provides property coverage through monoline policies, meaning the policy primarily insures property rather than combining property and liability coverages. Dwelling policies are designed for residential properties that may not qualify for a standard Homeowners policy because of factors such as the property's age, value, occupancy, condition, or location. Common examples include older homes, rental or investment properties, seasonal residences, and secondary homes.

This chapter examines the coverages available under the three Dwelling Program policy forms:

  • the Basic Form (DP–1)
  • the Broad Form (DP–2)
  • the Special Form (DP–3)

An Insurance Story

Before building their new home, Liam and Sofia Nelson lived in a smaller house in a college town that they had purchased shortly after getting married. Rather than sell the property when they moved, they kept it as an investment and rented it to tenants for additional income. Because the Nelsons no longer occupy the house as their primary residence, a standard Homeowners policy may not be the most appropriate coverage. A Dwelling policy may provide a suitable and affordable option for insuring the structure and other covered property associated with their rental home.