Comparing homeowners insurance to dwelling fire insurance may initially seem like comparing apples to apples. After all, your home is a dwelling. However, the policies are actually designed to cover two different buildings under separate circumstances. You may own homes that aren’t applicable for homeowner’s insurance, and others may require additional insurance to cover certain circumstances.
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Your homeowner’s insurance is a policy designed to protect your property and your home in the event of unexpected disasters that damage your home. This policy does include coverage for fire damage to the structure of your primary residence and the possessions inside. Your primary residence is the home where you spend most of the year. Your primary residence generally contains most of your possessions, allowing your homeowner’s policy to provide coverage for your home and the bulk of your possessions.
Dwelling Fire Insurance
If you own multiple properties or have more than one house on your property, your homeowner’s insurance may not provide the coverage you need in the event of fire damage. Dwelling fire insurance provides coverage for homes that you own but don’t live in for most of the year. This may include vacation homes, cottages, cabins, or investment homes like rentals.
Dwelling fire insurance is a policy that provides coverage for homes other than your primary residence. Like homeowner’s insurance, your dwelling coverage policy will cover the costs of repairs or rebuilding when fire damage occurs. Dwelling coverage also protects attached structures like decks, porches, and attached garages. However, dwelling insurance doesn’t provide liability coverage or protection for possessions inside the home.
When to Use It
As a homeowner, there are several situations when you may need to purchase dwelling fire insurance. Since fire claims are some of the most expensive damage claims that occur, it pays to have a policy that will prepare you for the potential risks. If your property falls under these conditions, a fire dwelling policy might be necessary to provide you with the coverage you need.
- Owner Occupied: There are some situations that may make your primary residence exempt from a typical homeowner’s policy. If you have bad credit, a history of past claims, or property that is in a state of disrepair, it may be difficult to get homeowner’s insurance. Purchasing a fire dwelling policy will allow you to have coverage for your home in the event of a fire.
- Secondary Residences: If you own a vacation home or a cottage that you only visit a few weeks or months out of the year, you still need protection against the risks of fire damage. Fire dwelling coverage provided coverage for secondary homes, and you may be able to include add-ons that provide protection for your property inside the home.
- Investment Properties: Protection for rental homes is one of the most common uses for fire dwelling insurance. House fires often occur due to careless behavior, and you have little control over what happens in a home where you don’t reside. Besides covering the cost to rebuild after fire damage, fire dwelling insurance provides relocation funds for tenants and provides you with loss of rental income coverage.
- Vacant Homes: A home that’s up for sale or undergoing repairs can also benefit from a fire dwelling policy. Unoccupied homes can fall victim to electrical shorts, vandalism, and lightning strikes that could result in a fire.
An additional reason you may require fire dwelling coverage on any type of home is the location of your property. It can be difficult to get a homeowner’s policy that includes fire damage coverage in an area that is prone to wildfires.
Types of Fire Dwelling Insurance
Like most insurance policies, there are different levels of coverage under fire dwelling insurance. The types of homes covered under dwelling insurance vary widely. For this reason, there are options to help you find the dwelling coverage you need. The types of dwelling insurance include DP-1, DP-2, and DP-3. These policies supply varying levels of coverage.
DP-1: Basic Form
The basic form of dwelling policy is a named perils policy. When you file a claim under a DP-1 policy, your settlement is automatically actual cash value (ACV). However, it may be possible to opt for a replacement cost value for an extra cost. Your DP-1 policy provides coverage for damages due to:
- Internal Explosions (like a stove or water heater explosion)
You can include add-ons to increase the coverage of the DP-1 policy. These endorsements include vandalism and malicious mischief and extended coverage that includes:
- Hail or windstorms
- Other explosions
- Riot/civil commotion
- Volcanic eruptions
- Aircraft or vehicles
DP-2: Broad Form
The broad form is also a named perils policy, but the DP-2 form automatically settles claims on a replacement cost value. As indicated by the title, a broad form supplies more coverage than a basic form. Your DP-2 policy provides the following coverage:
- Extended coverage as mentioned in the basic form
- Vandalism and malicious mischief
- Weight of ice and snow
- Glass breakage
- Burglary damage
- Falling objects
- Frozen pipes
- Accidental discharge or overflow of water or steam
- Electrical damage
- Loss of rent coverage in the event tenants are required to move out while the landlord repairs the home from a covered loss
DP-3: Special Form
The special form policy provides the most coverage for your home. Instead of a named perils policy, the DP-3 policy is an open perils policy that covers all types of damage except exclusions named in the policy. While the dwelling is covered except for exclusions, personal property is only covered on a named perils basis. Exclusions in your DP-3 policy typically include:
- Laws and ordinances
- Water damage
- Intentional loss
- Gradual issues like mold, rust, and rot
Does dwelling fire insurance cover tenant damage?
Accidental tenant damage like negligence that leads to a fire is covered by all types of dwelling fire policies. Depending on the terms of your policy, some additional types of tenant damage may be covered. For instance, accidental damage may be covered if it’s not exempt from your policy or covered by your tenant’s renter’s insurance. Malicious damage may also be covered on some dwelling fire policies. Damage from normal wear and tear isn’t covered.
Does dwelling fire insurance cover loss of rental income?
Yes, if a covered event causes damage sufficient enough to require tenants to move out of the home, your policy will reimburse you for lost rental income.
Does landlord insurance cover the tenant’s personal property?
No. As the owner, your personal property that you store on the premises may be covered. Your tenants will need their own insurance to have protection for personal property. Renter’s insurance is designed to provide coverage for the personal belongings of renters.
Is there coverage for items the property owner leaves on the property to service the property?
Yes. Some dwelling fire policies cover personal equipment that is stored on a rental property for maintenance and repairs. If your dwelling fire policy doesn’t include personal property coverage, you will have the option to purchase an add-on or endorsement to include your property in the policy. It’s important to note that your personal property will be protected only in the event that damage is caused by a covered event within your policy.
Can landlords require tenants to have rental insurance?
Yes, as part of the rental or lease agreement, you can require your tenants to purchase rental insurance. As a landlord, you have the right to require your tenants to produce proof of renter’s insurance before signing the lease.
Learn More About Dwelling Fire Insurance vs Homeowners Insurance
Homeowner’s insurance and dwelling fire coverage have many similarities, but they’re not designed to provide coverage for dwellings in the same situations. To learn more about dwelling fire coverage and if it applies to your situation, get in touch with the insurance experts at LoPriore Insurance Agency. Our agents are standing by to help you find insurance policies designed to fit your lifestyle.