You down with HO3? Yeah, you know me!
With so many different types of coverages, it’s easy to get confused. When you’re looking to insure your property, the most popular policies are Homeowners (HO3) or Dwelling Fire (DP3). While they both can provide sufficient coverage for your property, it’s important to know which type of coverage is the best for your home. Not only can the type of policy affect your rates but also what’s covered under your policy. Here’s how to determine whether a HO3 or DP3 policy is right for you!
HO-3 (Standard Homeowners Policy)
HO3 policies are the most common homeowners insurance. How do you know if you should go with an HO3 policy? Ask yourself the following questions: Do you own the property? Do you live in the home? If you answered “YES” to both questions, then an HO3 policy is for you! This policy will cover the structure, liability, and contents. The amount of coverage for each of these areas will be determined by your specific needs. An HO3 policy provides more robust coverage than a dwelling fire policy.
The coverage included in an HO3 policy will vary depending on whether you own a single family or multi-family home. In a single family home, a typical HO3 policy will cover the structure and home’s contents as long as it’s damaged by a covered peril. In the case of a multi-family property, if you live in one of the units, the structure and contents will typically be covered.
DP-3 (Dwelling Fire Policy)
A DP3 product is similar but has one major difference: occupancy. If you own a home but do not live in it, then a dwelling fire policy is the right option. You may own a home, but rent out the rooms or the whole property. DP3 policies cover the structure, loss of use or rental coverage, and usually personal liability. If you are renting out your property, it’s a good practice to require your renters or tenants to have renter’s insurance (HO4) because a DP3 policy offers limited coverage for their personal property.
Additional items that may not be covered by a DP3 product can include other structures, such as a garage or shed and does not offer replacement cost coverage on the dwelling. In some cases, loss of rent may be covered. It is important to understand what your insurance policy covers and what is not covered. Check with your agent or insurance company if you have questions regarding your policy.