DP3 vs. HO3

If the property is a multi family (2-4 family) and you, as the owner, live in one of the units, then you can use the tried, true, and tested HO-3 homeowners policy (with a few tweaks) to cover the entire building, its contents, and your liability exposure. 

However, if you, the owner, do not live at the property, you should use the "Dwelling Fire Policy" to protect your interests properly.  The most popular policy is the DP-3.  

The DP-3 is  popular because it is an “open Peril” policy that covers losses to the home’s structure, loss of use or rental coverage, and personal liability.   Contents (also known as personal property, such as furniture or appliances) can be added if you need that, but contents are not automatcially included as in the homeowners policy.

If the owner insures a rental proerty with an HO-3, but lives elsewhere, it's a bad fit: You risk NOT being covered for any losses by the insurance company.   Working with a professional agent to steer you clear of such mistakes is useful.  Most rental 1-2 family properties that are not owner-occupied are insured under a DP-3.  The table below compares the HO-3 to the DP-3.

Buildings with 3 and more families are often insured through a commercial policy rather than either the DP-3 or HO-3. (though some DP-3s will insure up to a 4-family building).  The most common approach with these larger buildigns is a package which includes automatically both property coverage (for the building, lost rents, etc.), and liability protection in case you are sued.   

Terms differ widely, so work with an agent or broker that represents multiple insurance companies, such as Gordon, to ensure the best possible fit, so you can sleep as well as your tenants. 

For more guidance on which approach is best for you, contact us through the form to the right or just call us at 800-649-3252.  

Homeowners vs. Dwelling policy comparison chart

Homeowners Policy

 Dwelling & Fire Policy




  The HO-3 has been the most common homeowner’s policy for 60 years and is adequate for the majority of homeowners and their insurance needs.   For owners who live there.

  The DP-3 is for rental properties that the owner does not occupy.  It covers the basics of the house (dwelling) other coverages are not automatic: speak to us about customizing protection to your needs.

Coverage A.   Dwelling. The amount of money your policy will pay to rebuild your home if it is destroyed.

Coverage A.   Dwelling. The amount of money your policy will pay to rebuild your home if it is destroyed.

Coverage B.   Other Structures. 10% of coverage A is automatically included.  The amount your policy will pay to rebuild structures such as sheds & garages.

Other Structures.   Not automatic. Have a garage? Other outbuilding? Add optionally.

Coverage C.   Personal Property. The amount you have to replace all of your “stuff” in the event of a loss.

Personal Property  generally not included.  Tenants should have their own insurance.  Landlords can optionally include personal proerty for applainces and if furnished.

Coverage D.   Loss of Use. The funds you will have to rent another place while your damaged home is fixed or rebuilt.

Coverage D.   Loss of Use or Fair Rental Value.  The funds you will have for the tenants to rent another place or stay at a hotel while your damaged house is fixed or rebuilt.

Personal Property Replacement Cost.  Ensures you get the full price to fix or replace any lost personal items in a total loss.

Repalcement Cost on personal property generally not included.

Coverage E.   Personal Liability. In the event that you become a defendant in a lawsuit, the insurance company will provide up to $1 Million is coverage.

 Coverage E.   Personal Liability. In the event that you become a defendant in a lawsuit, this can provide up to $1 million in protection.  Always important for rental properties. Not all DP-3 policies offer Personal Liability and we may have to place a separate Liability policy for this protection. 

Coverage E. Medical Payments to Others. If someone falls and is injured on your property, the medical payments will be covered up to this amount.

 NOTE: If you own a primary home and have a homeowner’s policy, you may extend the liability to cover the rental (multi-family) property.

Optional Coverages & Endorsements.  There are many additional coverage items you can add to your HO-3 such as sewer backup, personal jewelry, identity fraud coverage, business pursuits, etc. 

Optional Coverages & Endorsements: also avaialble to meet your unique needs.  Talk to an expert at Gordon to customize protection for your individual needs.

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