Dwelling Fire Insurance

About Dwelling Fire Insurance

A Dwelling Fire (DP-3) policy is similar to a Homeowners policy. It is an insurance policy best suited for a residential property typically rented to others. The policy covers losses to the building’s structure, loss of use or rental Income, and customarily personal liability (this is an optional coverage). These policies also allow additional coverage through endorsements.

Understanding Your Risks and Coverages

The DP3 rental home insurance policy is considered the best insurance policy for rental properties or non-owner occupied homes.

Bankers Helps You Prepare for the Risks You May Face

Simply put, risk management is the process of, first, identifying the risks you face as a homeowner and, second, figuring out ways to minimize – or manage – them. There are nine major risks that face homeowners and some or all may apply to you, depending on where you live:

To learn how to protect yourself and your family from these risks visit Insurance 101.

Deductibles

A deductible is the amount of out-of-pocket expense for which you are responsible before the insurance coverage begins.

  • You can lower your premium by increasing your deductible.
  • Most Homeowners insurance policies include a “$500 All-Other-Perils (AOP) Deductible.” This deductible applies to all covered losses except where special deductibles—such as Hurricane, Named-Storm, or Windstorm Deductibles–apply.
  • Hurricane, Named-Storm or Windstorm Deductibles can be either a dollar amount or a percentage of the coverage amount and can be increased to reduce your premium. However, you need to consider carefully how much out-of-pocket expense you are willing to retain. For example, if you have a 2% Hurricane Deductible and your house is insured for $200,000, your out-of-pocket expense would be $4,000 (2% of $200,000) for any damage caused by a hurricane.
  • Some additional coverages, like earthquake coverage, have a separate set deductible.
  • Deductibles are an important feature of the policy and should be discussed thoroughly with your agent to understand what each choice you make can mean in terms of your out‐of‐pocket expenses.

Primary Dwelling Fire (DP3) Insurance Coverages

Dwelling (Coverage A)

Dwelling coverage is the section of the policy that pays for damage to your home in the event of a covered loss. The amount you purchase should be enough to completely rebuild your home and attached structures (like an attached garage) in the event of a total loss – but should not include the value of the land. Note: Market Value or Assessed Value of your property should not to be used to determine the cost to rebuild. These values are not good indicators of local building costs. Talk to your Bankers agent about how best to determine the cost to rebuild.

Other Structures (Coverage B)

Many properties have separate buildings such as sheds or fences. Other Structures coverage reimburses the costs associated with repair or replacement in the event of a covered loss.

Personal Property (Coverage C)

As a homeowner, you acquire a lot of items to decorate and use in your home. Personal Property coverage provides protection for some of those items. This coverage is included in a Homeowners policy at Actual Cash Value (ACV), which is the value of the item at the time of the loss, minus any accumulated depreciation. This coverage can be upgraded to Replacement Cost (RC) for an additional premium. This will allow the property to be replaced with like‐kind property at today’s market price subject to policy limits and deductibles. This is what most people prefer and we highly recommend that you purchase Full Replacement Cost coverage as part of your policy.

Fair Rental Value / Additional Living Expense (Coverage D / E)

This is a combined coverage and provides coverage for Loss of Use and/or Loss of Rental Income due to a covered loss. If the home is unable to be occupied while being rented to a tenant, Coverage D – Fair Rental Value provides protection for the loss of the rental income while the tenant is unable to live in the house up to the limit of liability. If the home is unable to be occupied while the owner is using the dwelling, Coverage E – Additional Living Expense provides reimbursement for additional living costs incurred while unable to live in the home.

Liability (Coverage L)

Personal Liability coverage pays for legal damages that are awarded to a third party when you are found to be liable for their bodily injuries or damage to their possessions while they are on your property. This coverage also helps pay your attorney fees and court costs related to a covered loss.

Medical Payments to Others (Coverage M)

Medical Payments coverage helps pay for medical bills incurred by visitors to your home who sustain bodily injury while on your premises or due to your personal activities.

Additional Dwelling Fire (DP3) Insurance Coverage

Personal Property Replacement Cost Coverage: Provides contents coverage for the owner’s propery at full replacement cost

Sinkhole Coverage: Provides coverage for sinkhole losses; in certain counties will require a structural inspection

Water Back Up and Sump Discharge or Overflow: Provides coverage for loss resulting from water which backs up through sewers or drains or which overflows from a sump

Ordinance or Law: Provides increased costs necessary to comply with the enforcement of any ordinance or law which requires or regulates construction, repair or demolition of damaged property.

 Limited Theft Coverage: Provides on premises theft coverage to property you own and keep on the premises. This does not cover property owned by your tenant.

Equipment Breakdown: Provides coverage for equipment breakdown as a covered peril; limit of liability is $100,000

Service Line Coverage: Provides coverage for costs to repair the covered underground pipes and wiring, as well as damage to outdoor property caused by repairs

Limited Screened Enclosure Buyback: Provides coverage to screened enclosures, pool cages, and carports permanently attached to the dwelling for loss due to windstorm or hail.