If you own a second home, vacation home, or residential investment property you rent out to others, you need insurance. However, because it's not your primary residence, no doubt you're looking for coverage at an affordable, budget-friendly price. After all, it's not the only home you need to protect. You may be tempted to obtain a standard homeowner's (HO-3) policy on the property and customize it to your liking. But wait! There's a more reasonably priced option available to Florida homeowners. It's called a DP-3 policy.
What Is DP-3?
A DP-3 is an insurance policy primarily designed for rental homes and investment property. This includes residences such as single-family homes, townhouses, duplexes, and villas. A DP-3 policy is one of the most comprehensive forms of insurance coverage for property owners and landlords. It's also a great option for homes with older roofs, which can be difficult to insure.
The aim of a DP-3 is to offer homeowners an affordably priced alternative to the standard HO-3 homeowner's policy. Here's what it isn't: a DP-3 policy is not intended for commercial use – thus, apartments or condos are not eligible for DP-3 coverage. Rather, a DP-3 policy is ideal for homes owned or inherited by individuals, or in the name of an LLC, trust, corporation, or partnership.
DP-3 vs. HO-3 Comparison
Similarities: Both a DP-3 and HO-3 protect the dwelling and other structures on your property. Both are open-peril policies, meaning many different types of damage may be covered, except for the exclusions noted in the policy. Both have deductibles to be paid before insurance kicks in. And, in both cases, homeowners can pay to include additional coverage in their policy – such as for screen enclosures, golf carts, etc.
Differences: Because a DP-3 is primarily designed for homes rented to others, personal property isn't usually included in the base policy – since the home likely contains a tenant's belongings, not the landlord's (although this coverage can be purchased and added to a DP-3). Personal liability and medical payments to others are likewise excluded from a base DP-3 policy (but can be purchased). The loss-of-use coverage offered in a standard HO-3 homeowner's insurance policy helps pay additional living expenses should the owner-occupant need to live elsewhere while repairs are being made after a covered loss. Under a DP-3 policy, this becomes loss-of-rent coverage in which a landlord is paid for loss of expected rental income in a similar situation, if tenants must temporarily live elsewhere during repairs.
Why Is a DP-3 Best for Investment or Rental Property?
Many homeowners prefer a DP-3 policy to protect their investment or rental property – and here are the main reasons they do.
- It’s designed for you. The DP-3 is specifically designed to offer protections properties not owner-occupied require, but don't include all the bells and whistles of HO-3 coverage. But it can also provide a more affordable option for owner-occupied homes with well-maintained older roofs.
- Thoughtful property valuation. How the property is valued under a DP-3 is geared toward making the coverage more affordable for landlords and owners of homes with older roofs.
For example, with a DP-3 from Florida Peninsula Insurance Company, the structure of your home (except the roof) is covered at replacement cost (what it would cost to replace or rebuild at current prices, without regard for depreciation); the roof is covered at stated value a predetermined amount to be paid for roof repair/replacement). And, if a DP-3 policyholder opts to add personal property coverage to the policy, those belongings are covered at actual cost value (the value of the item when purchased, minus depreciation).
- Older roofs welcome. DP-3 coverage allows owners of homes with older roofs (10+ years) to get quality, comprehensive insurance coverage without breaking the bank. In some cases, it might be the only type of coverage available for these homes.
Affordable Insurance for Your Investment or Rental Property
At Florida Peninsula Insurance Company, your peace of mind is our top concern. If you own investment or rental property in Florida, we're proud to be able to offer you a DP-3 policy providing substantial protections at a lower cost than standard homeowner's insurance. To find out more about our DP-3 coverage, and whether it may be right for you, call your Florida Peninsula agent or get an online quote now.