DP1 and DP3 For Landlords In Florida

For landlords in Florida, choosing the right insurance policy is crucial for protecting your investment property from the state’s unique and significant risks, such as hurricanes, wind, and hail. The two most common types of landlord policies are the DP-1 and DP-3. These are “dwelling fire” forms, specifically designed for properties that are not occupied by the owner.

Here is a breakdown of the differences between a DP-1 and a DP-3 policy for landlords in Florida.

DP-1 Insurance (Dwelling Fire Form 1)

A DP-1 policy is the most basic and limited form of landlord insurance. It is a named-peril policy, meaning it only covers damage caused by the specific perils explicitly listed in the policy. If the cause of the damage is not on that list, you are not covered.

• Coverage Basis: Named Perils. A DP-1 policy typically covers a very limited list of perils, which often includes:
  • Fire and lightning
  • Windstorms and hail
  • Explosions
  • Riots and civil commotion
  • Smoke
  • Aircraft and vehicles
• Payout Basis: Actual Cash Value (ACV). This is a key difference and a major disadvantage. ACV pays for the cost of repairs or replacement minus depreciation. For example, if a 15-year-old roof is damaged, the insurance company will deduct its age and wear and tear from the total payout, leaving you to pay the difference out of pocket.
• Cost: DP-1 policies have the lowest premiums due to their limited coverage.
• Best For:
  • Landlords on a very tight budget.
  • Properties that are vacant for an extended period, as they are often more susceptible to the specific perils covered by a DP-1, like fire.

DP-3 Insurance (Dwelling Fire Form 3)

A DP-3 policy is the most comprehensive and popular form of landlord insurance. It is an open-peril or “all-risk” policy, which provides a much broader range of protection.

• Coverage Basis: Open Perils. A DP-3 policy covers all causes of damage to the dwelling and other structures unless the peril is specifically excluded in the policy. This means it covers common occurrences not included in a DP-1, such as:
  • Vandalism and malicious mischief
  • Water damage from burst pipes
  • Falling objects (like a tree limb)
  • Theft
• Payout Basis: Replacement Cost Value (RCV). This is a significant advantage. RCV pays for the full cost to repair or replace the damaged property with new materials and labor, without deducting for depreciation. This can save you thousands of dollars in the event of a major loss.
• Cost: DP-3 policies have higher premiums than DP-1 due to their comprehensive coverage.
• Best For:
  • Most landlords who want to protect their investment.
  • Properties with tenants, as the risk of damage is higher.
  • Owners who want peace of mind and more financial security.

Key Differences at a Glance

Additional Landlord Coverages in Florida

Regardless of whether you choose a DP-1 or a DP-3 policy, you should consider adding the following coverages, as they are often not included in the base policy:

• Loss of Rents/Fair Rental Value: This coverage is crucial for landlords. If a covered peril (like a fire or windstorm) makes your property uninhabitable, this coverage reimburses you for the lost rental income while the property is being repaired.
• Landlord Liability: This protects you if a tenant or visitor is injured on your property and you are found legally responsible. It covers legal fees, medical expenses, and settlements.
• Ordinance or Law Coverage: This is vital in Florida. If an older property is damaged, local ordinances may require you to bring the entire structure up to current building codes during the rebuild, which can be a huge, unexpected expense. This coverage pays for those costs.
• Flood Insurance: Standard landlord policies do not cover flood damage. In a coastal state like Florida, a separate flood insurance policy from the National Flood Insurance Program (NFIP) is highly recommended.

In short, while a DP-1 policy is an option for landlords on a minimal budget or for vacant homes, the DP-3 policy is almost always the better choice for a Florida rental property due to its broad coverage and RCV payout method, which provides more robust financial protection against the many risks of the state’s climate and real estate market.

We Insure all counties Escambia, Santa Rosa, Okaloosa, Walton, Bay, Gulf, Franklin, Wakulla, Jefferson, Taylor, Dixie, Levy, Citrus, Hernando, Pasco, Pinellas, Hillsborough, Manatee, Sarasota, Charlotte, Lee, Collier, Monroe, Miami-Dade, Broward, Palm Beach, Martin, St. Lucie, Indian River, Brevard, Volusia, Flagler, St. Johns, Duval, and Nassau.

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