A DP-1 is the basic dwelling fire policy: it covers the home against a limited number of named perils and pays actual cash value (ACV), which subtracts depreciation. A DP-3 is the special form: it covers the house against all causes of loss except those specifically excluded, and pays replacement cost when the house is insured to at least 80% of its replacement cost.[1][2][3] Neither includes liability, so a landlord adds it by endorsement or buys a separate liability policy.[3]
Rental homes, vacant properties, seasonal homes and other non-standard residences usually go on dwelling fire policies. This guide compares the three ISO forms, shows how the California FAIR Plan fits in, and helps you choose. For a quote on your California rental, vacant or seasonal house, see our dwelling fire insurance page.
What is the difference between DP-1, DP-2 and DP-3?
The difference is which causes of loss are covered and how each loss is valued. The ISO dwelling program offers three property forms: DP 00 01 (basic), DP 00 02 (broad) and DP 00 03 (special).[5] Each form includes dwelling coverage, other structures, personal property, fair rental value and additional coverages, but they cover different perils.[5]
| DP-1 (DP 00 01, basic) | DP-2 (DP 00 02, broad) | DP-3 (DP 00 03, special) | |
|---|---|---|---|
| Perils on the building | Fire, lightning, internal explosion; extended coverage and vandalism optional[2] | Broad named perils, such as windstorm, burglary damage, falling objects, weight of ice and snow, water discharge and freezing[4] | Open perils: everything not excluded[3][1] |
| Perils on contents | Same named perils[2] | Broad named perils[4] | Broad named perils[1] |
| Building loss settlement | Usually actual cash value[2] | Usually replacement cost if insurance-to-value requirements are met[4] | Replacement cost if insured to at least 80%[3] |
| Fair rental value | Up to 20% of dwelling limit, 1/12 a month[5] | Included with additional living expense, 20% combined[5] | Included with additional living expense, 20% combined[5] |
| Liability | Not included[1] | Not included[1] | Not included[3] |
| Typical use | Vacant or older homes, lowest price | Rentals needing named perils plus replacement cost | Rentals and second homes that need homeowners-like protection |
The practical difference shows up at claim time. A DP-1 policy with actual cash value pays what a 30-year-old roof or kitchen was worth after depreciation, not what it costs to replace. A DP-3 at replacement cost pays the cost to rebuild, provided the limit meets the 80% requirement.[3]
What does DP-1 cover?
DP-1 includes only fire, lightning and internal explosion unless you add others. Extended coverage perils (windstorm, hail, explosion, riot, aircraft, vehicles, smoke and volcanic eruption) and vandalism or malicious mischief can be added for an additional premium if they appear on the declarations page.[2] Losses are usually settled at actual cash value, though some insurers offer replacement cost for an additional premium.[2]
DP-1 fits a vacant house, an older house that an insurer won't write on a broader form, or an owner who wants to keep the premium low and could absorb depreciation. For example, Aegis has a California dwelling program that writes DP-1 on an actual cash value basis for dwellings up to $750,000.[6]
What does DP-3 cover?
DP-3 covers the dwelling and other structures against all direct physical loss except what the policy excludes, and covers personal property against named perils.[3] Common exclusions still apply, such as earthquake, flood, wear and tear and neglect, so a DP-3 is broad but not all-inclusive.
To get replacement cost, the dwelling must be insured to at least 80% of its replacement cost.[3] If you insure it for less, your claim will be reduced. In California, Aegis writes DP-3 with limited replacement cost for dwellings up to $900,000, and Green Shield writes DP-1 and DP-3 with building limits up to $1.25 million in California and up to $1 million of liability.[6][7]
Is DP-3 the same as HO-3?
No. They both cover the home on an open perils basis, but a DP-3 is designed for a dwelling that isn't a standard owner-occupied home and has no built-in liability or medical payments coverage.[3] An HO-3 homeowners policy includes personal liability and was designed for the owner who lives there. Once you rent the house out or leave it empty, an HO-3 may no longer fit, and that is when a DP-3 or a landlord endorsement comes in. For example, Delos offers landlord coverage by endorsement to its HO-3 for long-term rentals only, and excludes home-sharing such as Airbnb and VRBO.[8]
Where does the California FAIR Plan fit?
The FAIR Plan dwelling policy works like a DP-1: named perils only. Its base policy covers fire and lightning, internal explosion and smoke, with vandalism and malicious mischief and other options available at extra cost.[9] It writes owner-occupied homes, 1–4 unit rentals, seasonal homes, renters and condo units.[9]
Replacement cost is an option, not the default. For a dwelling more than 25 years old, the FAIR Plan offers dwelling replacement cost only if the roof was updated within the last 25 years; the home must be insured to at least 80% of its replacement cost; and mobile homes aren't eligible.[10] Since the FAIR Plan has no liability, a landlord on the FAIR Plan will need to add it through a DIC policy or a separate premises liability policy. Our guide to the FAIR Plan for rental property walks through that setup.
Which should I choose, DP-1 or DP-3?
Choose DP-3 if you could not pay for a partial loss out of your own pocket, if the house is worth rebuilding, and if an insurer will write it. Choose DP-1 when the house is vacant, very old or in an area where a broader form isn't available, or when you are willing to accept depreciated value in order to lower the premium. Whichever you choose, add liability for a rental: Green Shield offers up to $1 million on its dwelling program, and Aegis offers premises liability options on its DP-1.[7][6] See our guide to actual cash value vs. replacement cost for how much depreciation can take out of a claim.
Frequently asked questions
Is DP1 or DP3 better?
What is covered by DP2 and DP3 but not DP1?
Does a DP3 policy include liability?
No. A DP-3 has no personal liability or medical payments coverage. Add it by endorsement or buy a separate policy.[3]
This guide is for educational purposes and summarizes the ISO dwelling property forms as described by FC&S, IRMI and InsuranceXDate, the California FAIR Plan's public documents, and carrier program guides. Insurers file their own versions of these forms, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker and a registered FAIR Plan broker. It may earn a commission on a placement and does not guarantee that any coverage or price will be available. Some dwelling programs are written by non-admitted insurers, which are not backed by the California Insurance Guarantee Association. Each quote names its insurer and whether it is admitted.
The Bottom Line
DP-1 names a few perils and usually pays depreciated value, DP-2 names more and usually adds replacement cost, and DP-3 covers the building against everything not excluded.[2][3][4] None includes liability.[1] In California, the FAIR Plan behaves like a DP-1, so a rental or second home that qualifies for a DP-3 elsewhere usually gets better protection there.[9]
References
- 1.IRMI. “Dwelling Property Coverage Forms.” Accessed 2026-09-27. https://www.irmi.com/term/insurance-definitions/dwelling-property-coverage-forms ↩
- 2.InsuranceXDate. “Dwelling Property 1, Basic Form, DP 00 01.” Accessed 2026-09-27. https://www.insurancexdate.com/insurance-forms/DP/DP-00-01/ ↩
- 3.InsuranceXDate. “Dwelling Property 3, Special Form, DP 00 03.” Accessed 2026-09-27. https://www.insurancexdate.com/insurance-forms/DP/DP-00-03/ ↩
- 4.InsuranceXDate. “Dwelling Property 2, Broad Form, DP 00 02.” Accessed 2026-09-27. https://www.insurancexdate.com/insurance-forms/DP/DP-00-02/ ↩
- 5.PropertyCasualty360 (FC&S Legal). “Dwelling Property Forms: Coverages.” 2024. https://www.propertycasualty360.com/fcs/2024/07/29/dwelling-property-forms-coverages/ ↩
- 6.Aegis General Insurance Agency. “Aegis General Product Overview (CA).” 2026. https://6041899.fs1.hubspotusercontent-na1.net/hubfs/6041899/Carrier%20Store%20Resources/Aegis/Aegis%20General%20Product%20Overview%20CA.pdf ↩
- 7.Green Shield Risk Solutions. “Dwelling Fire: Specialty Lines program sheet.” 2026. https://6041899.fs1.hubspotusercontent-na1.net/hubfs/6041899/Green%20Shield%20Risk/Dwelling%20Fire-%20Specialy%20Lines.pdf ↩
- 8.Delos Insurance Solutions. “Homesite Policy Comparison: Homeowners vs Landlord.” 2023. https://6041899.fs1.hubspotusercontent-na1.net/hubfs/6041899/Carrier%20Store%20Resources/Delos/ho3%20vs%20ho3%20landlord.pdf ↩
- 9.California FAIR Plan Association. “Dwelling policies.” Accessed 2026-09-27. https://www.cfpnet.com/policies/dwelling/ ↩
- 10.California FAIR Plan Association. “Optional Dwelling Replacement Cost Addendum for Properties More Than 25 Years Old (CFP-RCAD-2).” 2016. https://www.cfpnet.com/wp-content/uploads/2021/06/RCAD-2%2008%202016.pdf ↩