3.2 Dwelling Policy Forms (DP-1, DP-2, DP-3)

Property & Casualty Insurance Exam

Track your progress as you read

Finished sections get a check mark.

1 Introduction

0.1 About the Property & Casualty Exam 0.2 How to Use This Course

2 Chapter 1: Insurance Fundamentals

1.1 Risk and Risk Management 1.2 Types of Risk 1.3 Principles of Insurance 1.4 The Insurance Contract 1.5 Policy Structure and Components

3 Chapter 2: Property Insurance Concepts

2.1 Property Coverage Basics 2.2 Perils, Hazards, and Exclusions 2.3 Valuation Methods 2.4 Coinsurance and Insurance to Value 2.5 Deductibles and Policy Limits

4 Chapter 3: Dwelling Policies

3.1 Dwelling Policy Overview 3.2 Dwelling Policy Forms (DP-1, DP-2, DP-3) 3.3 Dwelling Property Coverages 3.4 Dwelling Exclusions and Conditions

5 Chapter 4: Homeowners Policies

4.1 Homeowners Policy Overview 4.2 Homeowners Policy Forms (HO-2 through HO-8) 4.3 Section I: Property Coverages 4.4 Section II: Liability Coverages 4.5 Homeowners Exclusions 4.6 Homeowners Conditions 4.7 Common Homeowners Endorsements

6 Chapter 5: Personal Auto Policy

5.1 Personal Auto Policy Overview 5.2 Part A: Liability Coverage 5.3 Part B: Medical Payments Coverage 5.4 Part C: Uninsured/Underinsured Motorists 5.5 Part D: Physical Damage Coverage 5.6 PAP Exclusions 5.7 No-Fault Insurance and PIP

7 Chapter 6: Liability Insurance Concepts

6.1 Liability Insurance Basics 6.2 Negligence and Tort Law 6.3 Types of Legal Liability 6.4 Personal Umbrella Policies

8 Chapter 7: Commercial Property Insurance

7.1 Commercial Package Policy (CPP) 7.2 Building and Personal Property Coverage Form 7.3 Causes of Loss Forms 7.4 Business Income Coverage 7.5 Businessowners Policy (BOP)

9 Chapter 8: Commercial General Liability

8.1 CGL Policy Overview 8.2 Coverage A: Bodily Injury and Property Damage 8.3 Coverage B: Personal and Advertising Injury 8.4 Coverage C: Medical Payments 8.5 CGL Exclusions 8.6 CGL Limits and Conditions

10 Chapter 9: Commercial Auto Insurance

9.1 Business Auto Policy Overview 9.2 Covered Auto Designation Symbols 9.3 BAP Liability Coverage 9.4 BAP Physical Damage Coverage 9.5 Garage and Truckers Coverage Forms

11 Chapter 10: Workers Compensation

10.1 Workers Compensation Overview 10.2 Part One: Workers Compensation Insurance 10.3 Part Two: Employers Liability 10.4 Workers Compensation Exclusions 10.5 Other States and USL&H Coverage

12 Chapter 11: Other Commercial Lines

11.1 Inland Marine Insurance 11.2 Ocean Marine Insurance 11.3 Commercial Crime Insurance 11.4 Surety Bonds 11.5 National Flood Insurance Program 11.6 Professional Liability Insurance 11.7 Commercial Umbrella and Excess Liability 11.8 Boatowners and Personal Watercraft Insurance 11.9 Farm and Ranch Insurance 11.10 Mobile Home and Manufactured Housing Insurance 11.11 Title Insurance

13 Chapter 12: Insurance Regulations and Ethics

12.1 Producer Licensing 12.2 Producer Authority and Responsibilities 12.3 Unfair Trade Practices 12.4 Claims Settlement Practices 12.5 State Insurance Department 12.6 Penalties and Disciplinary Actions

3.2 Dwelling Policy Forms (DP-1, DP-2, DP-3)

Key Takeaways Explain This Topic AI

DP-1 (Basic, DP 00 01) is named-perils, pays on Actual Cash Value, and provides NO theft coverage in its base form

DP-2 (Broad, DP 00 02) is an expanded named-perils form that ADDS theft and several broad perils, and includes replacement-cost loss settlement

DP-3 (Special, DP 00 03) provides OPEN-perils (all-risk except excluded) on the dwelling and other structures, with named perils on contents — the closest dwelling parallel to HO-3

Extended Coverage (EC) and Vandalism & Malicious Mischief are optional add-ons on DP-1 but built into DP-2 and DP-3

Liability is never built into any DP form; it is always added by endorsement
Last updated: June 2026

The Three Forms at a Glance

ISO publishes three dwelling forms. Coverage and premium rise across the series; none includes liability.

Form ISO Number Dwelling Perils Contents Perils Loss Settlement
DP-1 DP 00 01 Named (fire/lightning + optional EC, V&MM) Named ACV
DP-2 DP 00 02 Broad named perils Broad named Replacement Cost
DP-3 DP 00 03 Open perils (all-risk) Broad named Replacement Cost
DP-1: Basic Form

The DP-1 is the narrowest, least expensive form. In its core state it insures only fire, lightning, and internal explosion . The other common perils are added by attaching the Extended Coverage (EC) group and Vandalism & Malicious Mischief (V&MM) :

EC perils (memorize as WC SHAVVER -style list): W indstorm/hail, C ivil commotion/riot, S moke, H ail (part of windstorm), A ircraft, V ehicles, V olcanic eruption, E xplosion, R iot

V&MM must be added separately

Key DP-1 facts:

Pays on Actual Cash Value (ACV) = replacement cost minus depreciation
No theft coverage even with EC and V&MM
Windstorm/hail covers exterior damage; interior is covered only if wind first creates an opening

Exam tip: "DP-1 = no theft" and "DP-1 = ACV" are the two facts most often tested about the Basic Form.

DP-2: Broad Form

The DP-2 is an expanded named-perils form. It includes the DP-1/EC perils PLUS broad perils such as:

Falling objects
Weight of ice, snow, or sleet
Accidental discharge or overflow of water or steam
Sudden and accidental tearing apart, cracking, burning, or bulging of a heating/AC/water system
Freezing of plumbing, heating, AC, or appliances
Sudden and accidental damage from artificially generated electrical current

DP-2 also upgrades loss settlement to replacement cost on the building (subject to the 80% coinsurance condition) and adds theft by endorsement options. It is a common landlord choice when open perils are not required.

DP-3: Special Form

The DP-3 is the broadest dwelling form and the most frequently sold to landlords. It insures the dwelling and other structures on an open-perils ("all-risk") basis — every cause of loss is covered unless specifically excluded. Personal property (Coverage C) remains named perils using the DP-2 broad list.

Component DP-3 Basis
Coverage A – Dwelling Open perils
Coverage B – Other Structures Open perils
Coverage C – Personal Property Named (broad) perils
Loss settlement Replacement cost on building
DP-3 vs. HO-3

Feature DP-3 HO-3
Dwelling Open perils Open perils
Contents Named perils Named perils
Liability None (add endorsement) Included
Medical payments None Included
Target Landlords/non-occupants Owner-occupants
Named-Perils Comparison

Peril DP-1 (+EC/V&MM) DP-2 DP-3 (open)
Fire / lightning Yes Yes Covered
Windstorm / hail Yes Yes Covered
Vehicles / aircraft / smoke Yes Yes Covered
Theft No Optional Covered
Falling objects No Yes Covered
Ice/snow weight No Yes Covered
Accidental water discharge No Yes Covered
Freezing / electrical No Yes Covered
Decision Guide
Need the cheapest possible fire-only protection on a low-value or vacant structure → DP-1
Need solid named-perils coverage including water and weight-of-ice losses → DP-2
Want the broadest building protection (any non-excluded cause) for a rental → DP-3

In every case, add the Personal Liability Supplement if the landlord wants liability protection.

Open Perils vs. Named Perils — Who Carries the Burden of Proof

The difference between DP-2 and DP-3 is more than a longer peril list; it shifts the burden of proof in a claim:

On a named-perils form (DP-1, DP-2), the insured must show the loss was caused by a listed peril. A loss from an unnamed cause is simply not covered.

On an open-perils form (DP-3 dwelling/other structures), the insurer must prove the loss falls under an exclusion to deny it. Anything not excluded is covered.

This is why DP-3 is so much more valuable to a landlord facing an unusual loss — say, a delivery truck backing into a porch, a falling tree limb, or accidental cosmetic damage. On DP-3 those are covered unless excluded; on DP-2 the adjuster looks for them on the named list and, if absent, denies.

The Special-Form Carve-Backs on DP-3

Even on the open-perils DP-3, personal property reverts to broad named perils and a handful of special limitations apply to the dwelling. Theft of building materials from an unoccupied or under-construction dwelling, and certain water-related and freezing losses, are addressed with conditions rather than full coverage. Candidates should remember the headline split:

DP-3 Element Treatment
Dwelling & other structures Open perils (covered unless excluded)
Personal property Broad named perils (DP-2 list)

Excluded throughout Flood, earthquake, war, wear and tear, etc.

Forms vs. Endorsements — A Common Mix-Up

Do not confuse a form (DP-1/2/3, which sets the breadth of perils) with an endorsement (which modifies the chosen form). Theft on a DP-1, broadened theft on a tenant-occupied dwelling, ordinance-or-law cost, and personal liability are all endorsements layered onto whichever base form was selected. On the exam, when a question says "by endorsement," it is signaling that the base form alone would not respond.

Memory Hooks
DP-1 = "1 cheap form, 0 theft, ACV."
DP-2 = "2 = broad, adds theft + water + ice, replacement cost."
DP-3 = "3 = open on the building, named on the stuff."

No DP form = liability. Liability is always a separate add-on.