DP3 vs. HO3

The DP3 refers to an insurance policy covering a residential building or Fire Coverage, usually rented to others. The HO3 is reserved for homeowners, but not exclusively single-family homes.

If you own a multi-family (2-4 family) property and live in one of the units you can usually use the tried, true and tested HO3 policy to cover the entire dwelling, your contents (your stuff), and your own personal liability exposure. Because you live there, the cost of insurance is lower than if you didn’t.

If the owner does not live at the property, a homeowners policy won’t work. Instead you would use a Dwelling Fire Policy to properly protect your interests. The most popular Dwelling Fire policy is known as the DP3.

The DP3 is popular because it is an Open Peril policy that covers losses to the building’s structure, “loss of use'”or rental coverage, and customarily personal liability as well. Contents (also known as personal property, such as furniture or appliances) are NOT automatically included the same way as in the homeowners policy, but can be added. Many rentals don’t include furniture, so there’s no charge unless you add this.

If the owner insures a rental property with an HO3 but lives elsewhere, it’s a bad fit; you risk NOT being covered for losses. Most 2- and 3-family properties rented to others that are not owner-occupied are insured under the DP3. View the table below comparing features of the HO3 to the DP3.

Buildings with 3 or more families that are investment properties rented to others are most often insured on a commercial policy rather than either the DP3 or HO3 (though some insurance companies will insure up to a 4-family building using a DP3). This commercial policy will include coverage for loss of rents and responds to any suits you may be brought into in the event of a claim.