What’s the difference between DP1 and DP3?
What’s the difference between DP1 and DP3?
Kin editorial staff
DP1 and DP3 policies are both predominantly used to protect investment properties. The key differences between these policies are the types of coverage offered, the number of perils covered, and how they settle claims.
For starters, the DP3 is described as having more robust coverage than a DP1 because the DP3 is an open perils policy. That means it protects your home against all sources of loss except those the policy names as exclusions. A DP1 only protects against nine specified perils.
Another difference between DP3 policies and DP1 policies is how they pay for losses. A DP1 only protects your dwelling for its actual cash value. With a DP3, the structure of your home is usually covered for its replacement value, or what it would cost to rebuild your home from the ground up with similar materials after a total loss.
DP3 policies purchased through Kin can also include coverage for:
- Other structures.
- Personal property.
- Loss of use.
- Personal liability.
- Medical payments.
You may also be able to add a roof surfacing payment schedule endorsement to your policy. Adding this endorsement changes your coverage so that wind and hail claims for your roof are paid on a schedule based on your roof’s age. All other covered losses to your roof and the rest of the home’s structure are insured for their full value. This adjustment usually means we can insure homes with older roofs and offer a sizable premium discount.
DP1 vs. DP3 coverage comparison
| Coverage | DP1 | DP3 |
| Structure | Actual cash value | Replacement cost |
| Other structures | Included | Included |
| Personal property | No coverage | Included for property owners only |
| Fair rental value | No coverage | Included |
| Premises liability | Optional | Optional |
| Medical payments | Optional for premises only | Optional for premises only |
| Vandalism | No coverage | Included |
| Theft | No coverage | Included |
| Power failure | No coverage | No coverage |
When do you need a DP1 vs. a DP3?
Typically, a DP1 policy is used for vacant properties (and properties that will be vacant for at least 30 days). These might be properties pending a sale or assumed in probate that don’t have the need for robust coverage. Investors who plan on rehabbing a property to flip might also get a DP1 policy.
However, if the property owner needs expanded or more customizable coverage, DP3 is usually the better policy. You might consider a DP3 policy if you have:
- An investment property and need to protect your rental income.
- Personal belongings on the property.
- Concerns about the excluded perils in a DP1 policy, such as vandalism.
- Exposure to liability claims for bodily harm and property damage on your premises.
A DP1 policy usually isn’t the best option for a property with tenants.