When it comes to dwelling fire insurance, there are three main forms or levels of coverage available: Basic Form (DP-1), Broad Form (DP-2), and Special Form (DP-3). Each form offers a different level of protection, allowing you to choose the coverage that best suits your needs and budget.

Basic Form (DP-1)

The DP-1 policy is the most basic form of dwelling fire insurance. It is a “named perils” policy, which covers losses caused by specific perils explicitly listed in the policy. Typically, the DP-1 form covers losses due to:

– Fire

– Lightning

– Internal explosions (such as from a stove or water heater)

Additionally, you can add optional endorsements to a DP-1 policy to provide coverage against vandalism and malicious mischief and extended coverage for perils like windstorms, hail, smoke, and volcanic eruptions.

Claims under a DP-1 policy are typically settled on an actual cash value (ACV) basis, which means the payout is based on the property’s depreciated value at the time of the loss. However, you may have the option to purchase a replacement cost value (RCV) endorsement for an additional premium.

Broad Form (DP-2)

The DP-2 policy, also known as the Broad Form, provides more comprehensive coverage than the Basic Form. Like the DP-1, it is a “named perils” policy, but it covers a broader range of perils, including:

– All perils covered by the DP-1 form

– Extended coverage perils (e.g., windstorms, hail, smoke)

– Vandalism and malicious mischief

– Burglary damage

– Weight of ice and snow

– Glass breakage (if the building was not vacant for 60+ days)

– Accidental discharge or overflow of water or steam (if the building was not vacant for 60+ days)

– Falling objects (e.g., trees)

– Freezing of pipes

– Electrical damage

– Collapse due to decay, vermin, or insect damage

– Tearing apart, cracking, burning, or bulging

Unlike the DP-1 form, claims under a DP-2 policy are typically settled on a replacement cost basis, which means you’ll receive the full cost to repair or replace the damaged property without deducting for depreciation.

Special Form (DP-3)

The DP-3 policy, or the Special Form, is the most comprehensive dwelling fire insurance coverage available. It is an “open perils” or “all-risk” policy, which means it covers all types of damage to the dwelling and other structures except for the exclusions listed explicitly in the policy.

Typical exclusions in a DP-3 policy may include:

– War

– Water damage

– Laws and ordinances

– Neglect

– Intentional loss

– Mold, rust, rot, and other gradual losses

– Certain types of water damage

– Earth movement (e.g., earthquakes)

It’s important to note that while the DP-3 form provides open perils coverage for the dwelling and other structures, personal property (contents inside the dwelling) is covered on a “named perils” basis.

The key differences between these forms lie in the scope of coverage and the settlement basis for claims. The DP-1 offers the most basic coverage, while the DP-2 and DP-3 provide progressively broader protection, with the DP-3 being the most comprehensive option.