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.