Study guide
3.1 Dwelling Policy Forms DP-1, DP-2, DP-3
Arkansas Property & Casualty Insurance State
Track your progress as you read
Finished sections get a check mark.
1 Standalone Coverage Map
Standalone Coverage Map
2 Introduction: Arkansas Property & Casualty Insurance Exam Overview
Arkansas Property & Casualty Exam Overview
3 National Portion: Insurance Fundamentals
1.1 Risk, Hazards, Perils, and the Law of Large Numbers 1.2 Insurable Interest, Indemnity, and Other Insurance Principles 1.3 Insurance Contract Law and Elements 1.4 Policy Structure: Declarations, Insuring Agreement, Conditions, Exclusions 1.5 Parties, Agents vs. Brokers, and Authority
4 National Portion: Property Insurance Concepts
2.1 Causes of Loss / Named-Peril vs. Open-Peril 2.2 Valuation: ACV, Replacement Cost, and Functional Value 2.3 Coinsurance and the Coinsurance Formula 2.4 Deductibles, Limits, and Loss Settlement 2.5 Common Property Policy Conditions and Clauses
5 National Portion: Dwelling Policies (DP)
3.1 Dwelling Policy Forms DP-1, DP-2, DP-3 3.2 Dwelling Coverages A-E and Other Coverages 3.3 Dwelling Perils, Conditions, and Endorsements 3.4 Mobile Home and Specialized Dwelling Coverage
6 National Portion: Homeowners Policies - Forms & Section I
4.1 Homeowners Forms HO-2 through HO-8 and Eligibility 4.2 Section I Coverages A-D and Additional Coverages 4.3 Section I Perils Insured Against and Exclusions 4.4 Replacement Cost vs. ACV and Loss Settlement in Homeowners
7 National Portion: Homeowners Policies - Section II & Endorsements
5.1 Section II Coverages E (Liability) and F (Medical Payments) 5.2 Homeowners Conditions and Duties After Loss 5.3 Common Homeowners Endorsements (scheduled property, water backup, ordinance or law)
8 National Portion: Personal Auto Policy - Liability & Injury
6.1 Personal Auto Policy Structure and Eligibility 6.2 Part A Liability and Supplementary Payments 6.3 Part B Medical Payments 6.4 Part C Uninsured/Underinsured Motorists
9 National Portion: Personal Auto Policy - Physical Damage & Duties
7.1 Part D: Coverage for Damage to Your Auto 7.2 Exclusions and Part E: Duties After an Accident 7.3 Part F: General Provisions, Endorsements, and No-Fault Concepts
10 National Portion: Liability Insurance Concepts
8.1 Negligence, Torts, and Legal Liability 8.2 Defenses, Damages, and Vicarious Liability 8.3 Occurrence vs. Claims-Made Triggers 8.4 Bodily Injury, Property Damage, and Personal/Advertising Injury
11 National Portion: Commercial Property Insurance
9.1 Commercial Package Policy Structure and Common Policy Conditions 9.2 Building and Personal Property Coverage Form (BPP) 9.3 Causes of Loss Forms (Basic, Broad, Special) 9.4 Business Income and Extra Expense 9.5 Commercial Property Endorsements and the BOP
12 National Portion: Commercial General Liability - Coverages
10.1 CGL Coverage A: Bodily Injury and Property Damage Liability 10.2 CGL Coverage B: Personal and Advertising Injury, Coverage C: Medical Payments 10.3 Who Is an Insured and Supplementary Payments
13 National Portion: Commercial General Liability - Limits, Triggers & Exclusions
11.1 CGL Limits of Insurance and Aggregates 11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates 11.3 Key CGL Exclusions and Endorsements
14 National Portion: Commercial Auto Insurance
12.1 Business Auto Coverage Form and Covered Auto Symbols 12.2 Commercial Auto Liability and Physical Damage 12.3 Motor Carrier / Trucking and MCS-90 12.4 Garage Coverage Form and Garagekeepers 12.5 Commercial Auto Endorsements
15 National Portion: Workers Compensation
13.1 Workers Compensation Statutory Background and Benefits 13.2 Part One (Workers Comp) and Part Two (Employers Liability) 13.3 Premium Basis, Experience Modification, and Classification 13.4 Other States, USL&H, and Federal Acts 13.5 Workers Comp Exclusions and Endorsements
16 National Portion: Other Commercial Lines - BOP, Crime & Marine
14.1 Businessowners Policy (BOP) in Depth 14.2 Crime and Fidelity Coverage 14.3 Inland Marine and Nationwide Marine Definition 14.4 Ocean Marine Coverages (Hull, Cargo, Freight, P&I)
17 National Portion: Other Commercial Lines - Specialty & Professional
15.1 Farm and Agricultural Coverage 15.2 Commercial Umbrella and Excess Liability 15.3 Professional Liability and Errors & Omissions 15.4 Directors & Officers and Employment Practices Liability
18 National Portion: Other Commercial Lines - Surety, Flood & Specialty
16.1 Surety and Fidelity Bonds 16.2 National Flood Insurance Program (NFIP) 16.3 Cyber, Aviation, and Other Specialty Lines
19 National Portion: Insurance Regulation & Market Conduct
17.1 State Regulation, Licensing, and the McCarran-Ferguson Act 17.2 Rates, Forms, Solvency, and Guaranty Associations 17.3 Producer Authority, Fiduciary Duty, and Company Operations
20 National Portion: Ethics & Unfair Trade Practices
18.1 Unfair Trade Practices and Unfair Claims Settlement 18.2 Producer Ethics, Errors & Omissions Exposure, and Fiduciary Conduct 18.3 Privacy, Fraud, and Consumer Protection
21 Chapter 1: Arkansas P&C Insurance Regulation & Licensing
1.1 Arkansas Insurance Department 1.2 Arkansas P&C Producer Licensing Requirements 1.3 Arkansas Producer Responsibilities
22 Chapter 2: Arkansas Property Insurance
2.1 Arkansas Homeowners Insurance 2.2 Arkansas Commercial Property Insurance
23 Chapter 3: Arkansas Casualty & Auto Insurance
3.1 Arkansas Auto Insurance Requirements 3.2 Arkansas Liability Insurance 3.3 Arkansas Workers' Compensation Insurance
24 Chapter 4: Arkansas Ethics & Professional Conduct
4.1 Ethical Practices and Consumer Protection
3.1 Dwelling Policy Forms DP-1, DP-2, DP-3
Key Takeaways Explain This Topic AI
The ISO dwelling program has three forms: DP 00 01 (Basic), DP 00 02 (Broad), and DP 00 03 (Special), each with the 12 02 edition in wide use, with coverage breadth and premium increasing across the series.
DP-1 is named-peril and valued at actual cash value (ACV); DP-2 is broad named-peril at replacement cost; DP-3 is open-peril (all-risk) on the dwelling and other structures.
Dwelling forms cover non-owner-occupied risks (rentals, seasonal homes, dwellings that fail HO underwriting) and provide NO liability or medical payments without endorsement.
The DP-1 Extended Coverage (EC) and Vandalism & Malicious Mischief (V&MM) perils are optional add-ons, so a bare DP-1 may insure only fire, lightning, and internal explosion.
Eligibility allows up to four families and up to five roomers/boarders per family; a fifth unit pushes the risk to a commercial or specialty program.
Last updated: June 2026
What the Dwelling Program Is
A dwelling policy insures one- to four-family residential buildings on an Insurance Services Office (ISO) dwelling form. It is the home for risks that do not fit the owner-occupied homeowners (HO) program: landlord rentals, seasonal cabins, dwellings under renovation, and older homes that fail HO underwriting.
The forms are sometimes called dwelling fire policies because the basic form descends from the old standard fire policy. The single most tested fact is that the base dwelling form covers property only — there is no built-in personal liability (Coverage L) or medical payments (Coverage M). Those are added with the Personal Liability Supplement or a separate policy.
The Three ISO Forms
Memorize the form numbers, peril basis, and valuation. The exam loves to swap one attribute.
Form ISO Number (12 02 ed.) Peril Basis Default Valuation
DP-1 Basic DP 00 01 Named peril (fire, lightning, internal explosion; EC and V&MM optional) Actual cash value (ACV)
DP-2 Broad DP 00 02 Broad named peril (adds falling objects, weight of ice/snow, accidental discharge, etc.) Replacement cost
DP-3 Special DP 00 03 Open peril (all-risk) on Dwelling and Other Structures; named peril on contents Replacement cost
Exam trap: DP-3 is open-peril on the building (Coverage A and B) but named-peril on personal property (Coverage C). Many candidates assume open-peril contents — it is not.
DP-1 and the Layered Perils
DP-1 in its bare form is extremely narrow: fire, lightning, and internal explosion only. The buyer then layers on:
Extended Coverage (EC) — windstorm, hail, explosion (external), riot/civil commotion, aircraft, vehicles, smoke, and volcanic eruption. Memory aid: WHARVES (Wind, Hail, Aircraft, Riot, Vehicles, Explosion, Smoke).
Vandalism & Malicious Mischief (V&MM) — added by endorsement; excluded if the dwelling has been vacant more than 60 consecutive days before the loss.
This modular design makes DP-1 the cheapest entry point for a bare structure such as a vacant rental awaiting a tenant.
Eligibility Rules
- Eligibility Item Rule
- Number of families No more than four families
- Roomers/boarders No more than five per family
- Incidental occupancy A home office or one studio/office is permitted
- Owner vs. tenant Owner-occupied or tenant-occupied (HO is reserved for owner-occupants)
A four-plex is eligible for a DP form; a six-unit building is not — it moves to a commercial program.
Worked Selection Example
A landlord owns a $250,000 three-unit rental and lives elsewhere. A windstorm is the chief exposure and the units are fully furnished by tenants.
DP-1 would require adding EC to pick up wind, and would still pay losses at ACV (depreciated).
DP-3 insures the building open-peril at replacement cost , automatically including wind. If a $40,000 roof (10-year life, 5 years old) is destroyed by wind, DP-3 pays the full $40,000 to replace, while DP-1 with EC pays roughly $20,000 ACV after 50% depreciation.
The $20,000 swing on a single claim is why most insured landlords buy DP-3 despite the higher premium.
Why the Series Costs More as You Climb
Each step up the series buys breadth: DP-1 to DP-2 adds perils and switches to replacement cost; DP-2 to DP-3 flips the building to open-peril, which shifts the burden of proof to the insurer — the carrier must show an exclusion applies rather than the insured proving a covered peril caused the loss. That single change is the largest driver of the premium difference between DP-2 and DP-3.
Reading the Declarations Page
Every dwelling exam includes at least one Declarations-reading question. The Declarations identify the named insured , the described location , the policy period (12:01 a.m. standard time at the described location), the form number and edition (e.g., DP 00 03 12 02), each coverage limit (A through E) , the deductible , and any scheduled endorsements . The form number is the fastest way to identify which peril basis applies: a 00 01 suffix is Basic, 00 02 is Broad, and 00 03 is Special. Candidates who memorize these three suffixes can answer many form-identification questions in seconds.
How the DP Relates to the Standard Fire Policy
The dwelling forms incorporate the 165 lines of the Standard Fire Policy (SFP) that most states still embed by statute. The SFP supplies foundational conditions — the concealment or fraud provision, the suspension of coverage during increased hazard, and the pro rata other-insurance clause. When an exam question references concealment, misrepresentation, or the insured increasing the hazard within the insured's control, it is testing SFP-derived language that flows into every DP form.
Choosing Among the Forms in Practice
Producers match the form to the risk and the budget. A vacant structure awaiting demolition may justify a bare DP-1 because replacement cost is irrelevant. A furnished long-term rental that the owner wants protected at full value points to DP-3 with the Personal Liability Supplement and Broad Theft. A modest seasonal cabin where the owner accepts depreciated settlements might land on DP-2 as a middle ground. The exam rewards candidates who can read occupancy, value, and budget clues and select the form that fits — not simply the broadest form available.