If you own a home that a tenant lives in, your standard homeowners policy is invalid the moment a claim involves the rental. Insurers require a landlord (also called dwelling fire) policy because the risk profile is fundamentally different.
DP-1 vs. DP-3: pick DP-3 for almost every rental
DP-1 is the basic dwelling fire form, covering only named perils (fire, lightning, explosion, vandalism). DP-3 is the broad form, covering all perils except those specifically excluded, with replacement cost on the dwelling. The premium difference is usually 20 to 35 percent and almost always worth it.
Loss of rents coverage
If a covered loss makes the unit uninhabitable, loss of rents replaces the rental income while repairs are completed. Standard limits are 12 months of rent. For high-rent properties or in markets with long rebuild timelines (post-disaster), upgrade to 18 or 24 months.
Vacancy clauses and the 60-day trap
Most landlord policies suspend vandalism, water damage, and theft coverage after 60 days of vacancy. If you have a unit between tenants for an extended period, request a vacancy permit endorsement (typically $50 to $200 for 60 to 90 additional days).
Liability and umbrella for landlords
Carry at least $500,000 of liability on each landlord policy and an umbrella policy on top. Landlords are sued more often than they expect, especially over slip-and-fall, lead paint, mold, and tenant injury claims. The umbrella is the cheapest part of the program and the most valuable.
Quick comparison
| Coverage | DP-1 | DP-3 |
|---|---|---|
| Perils | Named only | All risk except exclusions |
| Loss settlement | Actual cash value | Replacement cost option |
| Loss of rents | Optional | Usually included |
| Liability | Optional | Usually included |
| Typical premium vs. homeowners | 80% | 110 to 130% |
Key takeaways
- DP-1 is the basic dwelling fire form, covering only named perils (fire, lightning, explosion, vandalism).
- If a covered loss makes the unit uninhabitable, loss of rents replaces the rental income while repairs are completed.
- Most landlord policies suspend vandalism, water damage, and theft coverage after 60 days of vacancy.
Final word
Insurance is at its best when you understand the product before you need it. Bookmark this guide, share it with anyone shopping for landlord insurance (dp-3) explained this year, and reach out via our contact page if you have a question we have not answered.
Related reading on InsureLab
Sources & further reading
Frequently asked questions
Will my homeowners insurance cover short-term rentals?+
Almost never. Airbnb, Vrbo, and similar platforms require a short term rental endorsement or a dedicated short term rental policy.
Should I require renters insurance from tenants?+
Yes. Make it a written lease requirement and ask for proof of $100,000 to $300,000 of liability. It dramatically reduces tenant disputes.
How is landlord insurance priced?+
Mostly on dwelling replacement cost, location risk, age and condition of the property, and the type of tenant (long-term lease vs. short-term rental).
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