3.1 Dwelling Policy Overview

Property & Casualty Insurance Exam

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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

3.1 Dwelling Policy Overview

Key Takeaways Explain This Topic AI

The ISO dwelling program (DP forms) insures residential property that is NOT owner-occupied as a primary residence — rentals, seasonal homes, and dwellings ineligible for a homeowners policy

Unlike a homeowners policy, the base DP form provides NO personal liability and NO medical payments — it is property-only unless liability is added by endorsement

The three ISO forms are DP 00 01 (Basic), DP 00 02 (Broad), and DP 00 03 (Special), with coverage and premium increasing across the series

Eligibility generally allows up to four families and up to five roomers/boarders per family; certain incidental business occupancies are permitted

Dwelling coverage is keyed to the described location and the named insured's interest, not to the family unit the way a homeowners policy is

Last updated: June 2026

What Is a Dwelling Policy?

A dwelling policy is property insurance for one- to four-family residential buildings written on an Insurance Services Office (ISO) dwelling form. The program is designed for risks that do not fit the owner-occupied homeowners (HO) program. The dwelling forms are sometimes called "dwelling fire" policies because the basic form historically grew out of the standard fire policy.

Typical uses tested on the exam:

Rental dwellings owned by a landlord who does not live there
Seasonal or secondary residences (vacation homes, lake cabins)
Dwellings under renovation or that fail HO underwriting (older homes, poor protection class)
Tenant-occupied single-family homes and small multi-family buildings (up to four units)
Eligibility Rules

The ISO dwelling program has specific eligibility limits candidates are expected to recognize:

Eligibility Item Rule
Number of families No more than four families in the dwelling
Roomers/boarders No more than five per family
Incidental occupancies Limited business use (e.g., a home office or one studio/office) is permitted
Owner vs. tenant May be owner-occupied or tenant-occupied; the HO program is reserved for owner-occupants

Exam trap: A four-plex is eligible for a DP form; a six-unit building is not — it would move to a commercial or specialty program.

Dwelling Policy vs. Homeowners Policy

The single most tested distinction is that the base dwelling form covers property only — there is no built-in liability or medical payments. Liability can be added with the Personal Liability Supplement or a separate liability policy.

Feature Dwelling (DP) Policy Homeowners (HO) Policy
Primary use Rentals, seasonal, non-qualifying Owner-occupied primary residence
Personal liability (Coverage L) NOT included (add by endorsement) Included
Medical payments to others (Coverage M) NOT included Included
Personal property Optional (Coverage C) Automatically included
Loss of use to landlord Fair Rental Value Additional Living Expense
Theft on basic form DP-1 has no theft ; HO forms include it Included
Coverage Lettering

Dwelling forms use letter designations that differ from homeowners letters — a frequent point of confusion:

Coverage Dwelling Form
A Dwelling
B Other Structures
C Personal Property (optional)
D Fair Rental Value
E Additional Living Expense

Note that on the dwelling form, liability is Coverage L and medical payments is Coverage M — and both are added separately, not part of A–E.

Worked Example

A landlord owns a $250,000 three-unit rental and lives elsewhere. She needs:

Coverage A for the building
Coverage D – Fair Rental Value to replace lost rent if a fire makes units uninhabitable
A small Coverage C limit for her own coin-operated laundry equipment and a refrigerator she supplies

A separate liability policy or the Personal Liability Supplement , because a tenant who slips on the stairs would otherwise have no coverage under the DP form

Her tenants, in turn, need their own HO-4 renters policies for their belongings and liability — the landlord's DP policy protects neither.

Industry Context

The dwelling line is a meaningful share of the residential market and has grown with single-family rentals and short-term rental platforms. Short-term rental (Airbnb/VRBO) exposures usually require an endorsement or a specialty program because the base DP form contemplates conventional long-term occupancy, not transient guests. Always read the exam question for clues — "landlord," "vacant," "seasonal," or "not occupied by the owner" all point toward a DP form rather than an HO form.

How the Dwelling Program Differs From the Homeowners Program in Structure

Beyond the liability gap, the dwelling program is built differently from the homeowners program in three ways the exam likes to probe:

No mandatory contents. A homeowners policy bundles Coverage C automatically (typically 50% of Coverage A). The dwelling form leaves contents optional , so a landlord with an empty rental can buy building-only coverage and pay no contents premium.

Loss of use is split by role. The homeowners form gives one Coverage D that flexes between Fair Rental Value and Additional Living Expense. The dwelling form names them separately — Coverage D (Fair Rental Value) for the landlord and Coverage E (Additional Living Expense) for an owner-occupant.

Perils are added in layers on DP-1. Where the HO forms come pre-loaded with broad perils, the DP-1 starts at fire/lightning/internal explosion and lets the buyer bolt on Extended Coverage and Vandalism & Malicious Mischief. This modular design is why DP-1 is the cheapest entry point for a bare structure.

Insurable Interest and the Described Location

Like all property insurance, a dwelling policy requires the insured to have an insurable interest — a financial stake that would suffer if the property were damaged. The policy attaches to a described location shown on the Declarations, not to wherever the insured happens to be. If the landlord sells the building, coverage does not automatically follow to a new property; a new policy or endorsement is required. This "follows the property, at a fixed location" character is the practical reason landlords with multiple rentals schedule each address separately rather than relying on a single floating policy.

Quick Eligibility and Selection Recap

Question on the Exam Correct Reading
Owner lives in the home? Lean HO program
Owner rents it out / lives elsewhere? Lean DP program
More than four families? Out of the DP program
Needs liability? DP requires the Personal Liability Supplement