Once you check your home insurance, you will notice coverage for the section or residence labelled with coverage. This part of your policy protects the physical structure of your home, essentially everything from the roof to the foundation. But housing and housing insurance are different products, as this is a subtle thing that you might hear. Homeowner Insurance Residences is designed for where you live full time. Meanwhile, housing insurance, or residential fire insurance, is another type of policy for properties that you don’t personally occupy, such as rentals, investment property, or vacant structures. We analyze the different levels of coverage available to non-owner buildings, as well as the protections that housing insurance can provide.
What is an insurance housing?
A residence is a type of property insurance designed for people who own a building but don’t live full-time. If you live in your home all year round, standard home insurance will probably meet most of your coverage needs. However, long-term time used as investment property and long-lived buildings of buildings usually have different coverage needs. That’s where the residential fire policy begins.
The residential fire policy is designed to guarantee buildings that may be covered under a home insurance policy. Property that is left unmanned for a long period of time presents different risks compared to major housing, and residential fire policies are written to ensure those risks.
What does housing policy cover?
What is covered in your residential policy depends on the type you choose: DP-1, DP-2, or DP-3. These types of housing insurance are structured similarly to home insurance and offer different levels of protection in the event of unexpected events (called “hazards” in the insurance industry). This takes a closer look at the various core coverage types included in residential fire insurance contracts.
- Residence (coverage a)
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Replace or repair the physical structure of a building, including walls, floors, foundations, roofs and other attached structures.
- Other Structures (Coverage B)
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Replace or repair isolated structures on properties, such as gazebos and sheds
- Personal property (Coverage C)
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Report on personal belongings of insured persons
- Fair Rental Value (Coverage D)
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If the property is rented out and the covered loss makes the property unmanned, this will help you pay for the loss of rental income
- Additional living expenses (compensation e)*
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If the owner is occupied and covered losses are not safe to live in, this will help pay the owner’s hotel, restaurant and other related invoices
*Not included in DP-1 policy automatically
What is DP-1 Insurance?
DP-1 provides minimal coverage for three residential insurance policies. Unlike other types, additional cost of living coverage is not automatically included. When you file a claim, you are usually paid on an actual cash value (ACV) basis. This means that depreciation will be considered in your claim, so your potential payments could likely be lower. This, and the smaller coverage range, usually makes DP-1 the most affordable housing policy.
What is DP-2 insurance?
DP-2 covers housing, other structures and personal property for the various hazards listed in the policy. It covers more types of losses than the DP-1, but not as much as the DP-3. Claims filed in the DP-2 policy are paid on a real cash value basis, as opposed to the replacement cost value (RCV). In terms of cost, the DP-2 is usually more expensive than the DP-1, but cheaper than the DP-3.
What is DP-3 Insurance?
Of the three types of housing insurance, DP-3 covers the most. Personal property is covered for losses from risks specially designated in your policy. Residences and other structures are covered on an open paryl basis. This means that it is covered unless a risk is specifically excluded on a per-policy basis. Like the DP-2, housing and other structures are insured at the value of replacement costs. Personal property is insured with actual cash value. This residential policy type offers the widest coverage, so the DP-3 premium is typically above DP-1 and DP-2.
DP-1 vs DP-2 vs DP-3
| danger | DP-1 | DP-2 | DP-3* |
|---|---|---|---|
| fire | ✔ | ✔ | ✔ |
| lightning | ✔ | ✔ | ✔ |
| explosion | ✔ | ✔ | ✔ |
| Riot | ✔ | ✔ | ✔ |
| Volcanic eruption | ✔ | ✔ | ✔ |
| Damage to the vehicle | ✔ | ✔ | ✔ |
| Damage from the aircraft | ✔ | ✔ | ✔ |
| Vandalism | ✔ | ✔ | ✔ |
| Robbery and damage | ✔ | ✔ | |
| Weight of ice, snow or sleet | ✔ | ✔ | |
| Falling objects | ✔ | ✔ | |
| frozen | ✔ | ✔ | |
| Sudden accidental flood | ✔ | ✔ | |
| Current | ✔ | ✔ | |
| Fireplace smoke | ✔ | ✔ |
*Only personal property loss. Residences and other structures covered in open paril bases.
What does residential fire policy cover?
Two main things are not covered by residential fire policies: theft and liability. If you want to cover these two things, you need to purchase a policy add-on called authorization. Vandalism is a risk to the targeted policy. However, this may not apply if the building is vacant for more than 60 days in a row. In insurance terminology, “vacancies” and “vacancies” mean two different things. The vacant building still has furniture, but the vacant properties do not have furniture or anyone living inside them.
Other housing exclusions are similar to those seen in home insurance. These include:
- flood
- earthquake
- war
- Nuclear danger
- Government seize
- procrastination
- Intentional loss
