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Get to Know Insurance: Landlord Insurance


Welcome back to Get to Know Insurance! In the last several years we have seen many of the properties in the Treasure Valley sold to real estate investors and the number of renters steadily rise. We think that is a good sign for the economy here in our great state because it shows how quickly the area is growing and how many people want to live here! With the recent influx of new residents, we have seen an increase in spending on infrastructure, education, more jobs and a higher median income!

That’s why this week we would like to go over dwelling / landlord insurance coverage. Any time an investor buys a new property, they will need to insure it, but insuring a building or home you’re not living in is a little different than a typical homeowner’s policy and we’ll explain why!

There are a few different kinds of dwelling policies, DP-1, DP-2 and DP-3. The DP stands for dwelling policy and the number is which form, or level of coverage, is being purchased. Different owners have different needs, are able to cover different losses and live in areas that may be affected by various perils, so it is important to know what your policy will cover.

A DP-1 usually covers the least amount of perils, typically fire, lightning and wind. This coverage form is typically written on an ACV, actual cash value, basis which means losses will be paid for based on the ACV rather than the replacement / repair cost. Some DP-1 policies can be written with replacement cost coverage but that will usually require a higher premium.

A DP-2 policy is known as the “Broad” policy because the list of perils is expanded. Some of the additional perils are weight of ice and snow, water discharge from pipes, falling object are just a few. This policy can be written as ACV or replacement cost. Replacement cost is generally preferred because the ACV is defined as replacement cost minus depreciation, so the amount that will pay out decreases over time.

The DP-3 policy is known as the “Special” policy because it is a comprehensive, all perils policy. That means that unless a peril is specifically excluded, like floods, it will be covered. The DP-3 is the most common dwelling policy that most insurance carriers sell because it offers the broadest coverage and the premium isn’t a drastic difference form the DP-1.

Liability, medical payments, and contents coverages can be added to most dwelling polices. Liability coverage is always a smart option to purchase because it will protect the owner if they are found legally liable for an injury or property damage. Loss of rent is a coverage that’s included in most dwelling policies and will cover the loss of rent if the dwelling has experienced a covered loss and is being repaired.

If you own properties, are thinking about buying properties or are curious and have questions, please don’t hesitate to reach out to us! At HD Insurance we are happy to help however we can, even if it doesn’t end with us selling a policy. Thanks for checking out another edition of Get to Know Insurance, we’ll see you next week!

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