If you’re a homeowner, you’re likely concerned with protecting your personal property against perils like fires, lightning storms, windstorms, hail, floods, and even vandalism. Don’t count on a home warranty to cover the structure of your home, or even most of its contents, since such warranties are really just in place to protect appliances from normal wear and tear. Instead, you’re going to need to look into the best homeowners insurance options for your needs.
Fire damage is one of the most common threats to homes since it can come from multiple sources, including electrical faults, storms, unattended cooking, and much more. Some level of fire protection is generally offered under a standard homeowners policy, but you may want additional fire insurance or insurance coverage for other events. Dwelling fire policies have become more commonplace, and they may have caught your eye. Before you can decide if one is right for you, it’s important to understand dwelling fire meaning.
Dwelling Fire Policies Explained
Dwelling coverage protects only the outer structure of a home. Despite being listed as a fire policy, it will also protect dwellings in cases of hail, vandalism, and potential theft. This doesn’t include contents insurance, so all things damaged due to a fire within the home will be exclusions.
A dwelling fire insurance policy is generally good for two reasons. First, it’s generally cheaper than other homeowners insurance policies, since it doesn’t cover as much. In many cases, dwelling insurance premiums will be around half as much as a full HO-1 home insurance policy. Otherwise, dwelling insurance is a great investment for landlords who need to protect their property but not necessarily the contents within. Tenants have rights to a safe dwelling, so landlords are responsible for making repairs as soon as possible after a fire, and they need a way to cover them. If you’re currently a tenant yourself, you’ll definitely want to ask your landlord about their insurance coverage, if you haven’t already. They may have a limited contents coverage policy to protect your personal belongings, but you shouldn’t bet on it.
Dwelling fire policy claims are handled based on whether the policy is based on replacement value or actual cash value. If you have a replacement value policy, then the insurance coverage will be good for the exact amount needed to rebuild and make repairs to the structure. If you have an actual cash value policy, then you’ll be reimbursed for the full cash value of the dwelling.
Types of Dwelling Fire Policies
Just like with other forms of homeowner’s insurance, there are different levels of dwelling fire coverage. A DP-1 policy is the standard, and it provides actual cash value coverage for basic perils like fire, smoke damage, lightning, explosions, theft, and hail. This type of coverage is usually reserved for vacant properties and buildings that may be converted into livable spaces someday.
A DP-2 policy is a bit more extensive, and it will provide additional coverage for ice damage, falling objects, and electrical damage. A DP-2 policy also provides replacement value coverage, meaning that, up until your coverage limit, your insurance company will pay the full costs of replacing everything that was damaged.
A DP-3 policy provides the most extensive coverage, including coverage for special perils as well as appliance and furniture coverage. Just keep in mind that a DP3 policy is much more expensive than the other options and should be reserved for properties that you’re really serious about protecting.
Also, keep in mind that dwelling fire policies offer nothing in the way of liability coverage. If someone is injured on your property that only has dwelling coverage, you can be liable for their injuries and expenses. Always speak with an insurance agent to make sure you have the best coverage for your needs.