Property & Casualty Insurance Exam (National Portion)Types of PoliciesMedium
An individual owns a rental dwelling that they do not occupy. The dwelling is insured under a Dwelling Policy. Which form would provide the broadest coverage for both the dwelling and personal property, including coverage for loss of rents?
- AHO-3 (Special Form)
- BDP-3 (Special Form)
- CDP-1 (Basic Form)
- DDP-2 (Broad Form)
Show answer & explanationAnswer & explanation
Correct answer: B. DP-3 (Special Form)
The DP-3 (Special Form) Dwelling Policy provides open perils coverage for the dwelling and other structures, and broad named perils coverage for personal property. It also includes Coverage D - Fair Rental Value, which covers loss of rents, making it the broadest option among the dwelling forms for both dwelling and personal property, including loss of rents.
Why the other options are wrong
- A. HO-3 is a Homeowners Policy, not a Dwelling Policy, and is designed for owner-occupied dwellings, not rental properties where the owner does not reside.
- C. DP-1 (Basic Form) provides named perils coverage only for a limited list of perils and does not automatically include loss of rents; it can be added by endorsement.
- D. DP-2 (Broad Form) provides named perils coverage for a broader list of perils than DP-1 for both dwelling and personal property, and includes loss of rents, but is not as broad as DP-3.
DP-3 (Special Form) Dwelling Policy
The broadest Dwelling Policy form, offering open perils coverage for the dwelling and other structures, broad named perils coverage for personal property, and including Fair Rental Value.
- Open perils for dwelling and other structures (all perils unless specifically excluded).
- Broad named perils for personal property (same as DP-2).
- Includes Fair Rental Value (Coverage D) for loss of rents.
Memory trick: Basic is limited, Broad adds more, Special covers all (almost).