Home Insurance Insights
Dwelling Fire Insurance Versus Homeowners Insurance
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Home Insurance Insights
A Home Insurance Policy and a Dwelling Fire Insurance Policy are both designed to protect residential properties, so it makes sense that they include similar coverage details. For example, both types of polices provide property owners with Dwelling Coverage for the physical structure of their home and any attached structures; Other Structures Coverage for things like a detached garage, separate shed, or entertainment area; and protection against a variety of common property threats that can cause damage, such as a house fire or a bad storm.
However, sharing these basic coverages does not make these policies interchangeable. To determine which solution is right for a specific property, it helps to understand the following three key areas where these policies differ:
A Homeowners Policy is insurance for your owner-occupied primary or secondary residence—the homes you own and live in, and that are filled with your personal belongings.
Any other residential properties you own or are planning to purchase may not be eligible for a standard Homeowners Policy. Instead, a Dwelling Fire Insurance Policy may be required. This type of policy is specifically designed for the distinct risks associated with rental and investment properties as well as dwellings that may be periodically left empty, including:
The two most common Homeowners Policies, an HO-3 and HO-5, are comprehensive insurance solutions that include coverage for your home’s physical structure and any attached or separate structures on your property as well as coverage for Personal Property, Loss of Use, Personal Liability, and Medical Payments.
Similar to Home Insurance, there are several different types of Dwelling Fire Insurance: Basic (DP-1), Broad (DP-2), and Special (DP-3) form.
However, regardless of which Dwelling Fire Policy type you have, the focus of the coverage is typically on protecting a building’s physical structure and, unlike Home Insurance, it may offer only minimal premises liability and little to no Personal Property Coverage.
This is a great example of when working with an independent insurance agent can make a difference. Your agent may be able to customize a Dwelling Fire Policy to enhance these areas of a policy’s coverage, which may help with the following expenses as long as they are the direct result of a covered event:
Additionally, you and your agent may want to discuss adding an optional Personal Injury Endorsement. This may help protect you from the financial repercussions of a lawsuit brought against you by a tenant for wrongful eviction, invasion of privacy, libel, slander, and defamation of character.
Most HO-3 and HO-5 Homeowners Policies include Open Perils Coverage for your home and other structures on your property. This means that unless a peril is specifically listed in your policy as an exclusion, your house, from roof to foundation, is insured against most perils, including the following:
On the other hand, both the Basic and Broad forms of Dwelling Fire Insurance Policies include named perils coverage, which means only losses specifically listed in your policy will cover your home and other structures on your property.
A Basic form policy (DP1) generally limits covered losses to fire, lightning strike, and internal explosions, while a Broad form policy, as its name suggests, offers broader coverage for common causes of property damage. Some of the additional listed perils in this type of policy may include windstorm and hail, vandalism, falling objects such as trees, and water damage.
The Special form (DP3) is the only Dwelling Fire Insurance Policy that offers open perils coverage. Similar to a Homeowners Policy, this type of Dwelling Fire Policy covers most perils unless they are specifically listed as excluded.
However, while a Special form is the most comprehensive Dwelling Fire Insurance, it still has some limitations and may only include minimal personal property protection. In addition, liability coverage generally has to be added through a policy endorsement or a separate Personal Umbrella Liability Policy.
In the end, while a Homeowners Policy and a Dwelling Fire Insurance Policy might seem similar, they are designed for very different purposes. A local insurance agent is an excellent resource to reach out to with more questions about the specific coverage details in your policies and for help modifying coverage to address exclusions and broaden your personal property and liability protection if needed.
Additionally, you may want to speak with your agent about the benefits of optional insurance solutions such as Home Systems Protection and Water Backup Coverage for your primary residence, a second home, or your rental and investment properties, or all the above.
Dwelling Coverage is often considered the most critical component of home insurance. It is designed to cover the physical structure of your home, including permanent fixtures and any attached structures.
Since Dwelling Coverage and Other Structures Coverage typically help homeowners pay for repairs, replacements, or the cost to rebuild their property after a covered loss, having the right coverage amounts is crucial.
Most properties are best insured by an HO-3 or HO-5 policy because both policies include six essential home insurance coverages. The key difference is in the coverage they provide for personal belongings.
Standard homeowners, condo unit owners, and many renters insurance policies typically provide Personal Property Coverage, which is critical protection to have if belongings are damaged or stolen.
If your home is declared uninhabitable due to a covered event, and you have to temporarily relocate, Loss of Use Coverage typically helps pay for necessary incremental living expenses you incur as a result.
After a covered property loss, if you are required to upgrade your home to comply with the latest town or state building codes, Ordinance or Law Coverage assists you with the cost of making these improvements.
“I feel comfortable having my insurance with The Andover Companies. I know that if something terrible happens, they will be there to support my family and guide us through the process. Insurance can be confusing, especially when you have multiple policies, but they have simplified the details so we can understand everything easily!”
“The Andover Companies service team is professional, personable, and extremely helpful. We’ve had our homeowners insurance with The Andover Companies for over six years and are happy to have recently added our secondary home with them in another New England state. I highly recommend insuring with them.”
“You can truly understand the value of your home insurance when you have a claim. My husband and I experienced firsthand how easy it was to work with The Andover Companies. A tree fell on our property, blocking the driveway. We submitted a claim with Andover and within days had a check in hand to reimburse us for the tree removal. The process was seamless.”
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