What is DP 1?
DP 1, also known as Dwelling Policy 1 or Basic Form, is an insurance policy designed to provide fundamental coverage for residential properties. It primarily covers damages caused by specific perils such as fire, lightning, and internal explosions. This policy is often chosen for vacant properties, rental homes, or older homes that may not qualify for broader insurance coverage.
Unlike more comprehensive policies, DP 1 operates on a “named-peril” basis, meaning it only covers the perils explicitly listed in the policy. If a peril is not named, it is not covered.
DP 1 policies are settled on an actual cash value (ACV) basis. This means claims are paid out based on the depreciated value of the property rather than the cost to replace it with a new equivalent. While it is a cost-effective option, DP 1 provides basic protection and may require endorsements for additional perils such as vandalism or windstorms.
This type of policy is commonly used for vacant or seasonal properties, rental homes, or older residences that may not qualify for standard homeowner’s insurance. However, it does not include liability coverage or protection for personal belongings inside the property, making it less comprehensive than other options like DP 2 or DP 3.