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 cover the building properly. The most popular of the policies 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 akknown as personal property) can be added, if you need or want that coverage, but contents are not automoatcially included as it is in the homeowners policy.
If the owner has an HO-3 on the property but lives elsewhere, they will NOT be covered for any losses by the insurance company. This is considered a material misrepresentation, and why 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 will be insured under a DP-3. The table below compares the HO-3 to the DP-3.
Buildings with 3 and more families are usually 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 gives both property coverage (for the building, lost rents, etc.), and liability protection in case you are sued.
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.