California Property & Casualty Broker-AgentProperty InsuranceMedium
A client is looking to insure a rental dwelling that they own but do not occupy. They want open perils coverage for the dwelling structure, but only named perils coverage for the personal property they keep on-site for tenant use (e.g., appliances). Which of the following Dwelling Policy forms would best suit their needs?
- ADP-3 (Special Form)
- BDP-1 (Basic Form)
- CDP-2 (Broad Form)
- DHO-3 (Special Form)
Show answer & explanationAnswer & explanation
Correct answer: A. DP-3 (Special Form)
The DP-3 (Special Form Dwelling Policy) provides open perils coverage for the dwelling and other structures, meaning it covers all direct physical loss unless specifically excluded. For personal property (contents), it provides named perils coverage, which aligns with the client's desire for specific coverage on tenant-use items.
Why the other options are wrong
- B. DP-1 provides basic named perils coverage for both dwelling and contents, which is less comprehensive than desired.
- C. DP-2 provides broad named perils coverage for both dwelling and contents, but not open perils for the dwelling.
- D. HO-3 is for owner-occupied dwellings, not rental properties where the owner does not reside.
DP-3 (Special Form Dwelling Policy)
A Dwelling Policy form that provides open perils coverage for the dwelling and other structures, and broad named perils coverage for personal property. It is designed for residential properties that are not owner-occupied.
- Open perils for dwelling, named perils for contents.
- Suitable for rental properties.
- More comprehensive than DP-1 or DP-2.
Memory trick: DP-3: 'D'welling 'P'erils are 'Open', '3' times better for landlords.