Dwelling Fire Insurance

You get to choose the covered perils based on your geographic area and budget. Those choices determine which form of dwelling policy to purchase:

DP-1: Basic Form – The lowest cost and least amount of coverage. Covered perils: fire, lightning, and internal explosion are covered in most Basic Form dwelling policies.

Important: While cheaper, keep in mind that DP-1 approved claims will pay actual cash value (ACV), not replacement cost value (RCV). ACV means depreciation will be factored in to determine value. Simple example:

A fire destroys your 10-year-old kitchen:

Actual Cash Value: factoring in age and condition of the kitchen prior to the fire: $5,000 – that’s what you would get from your insurance provider under a DP-1, less your deductible, for your kitchen. Cost of labor to rebuild is not included because labor is not part of the kitchen’s value.

Replacement cost value (or cost to replace) the kitchen: $15,000 – That’s what you would get paid under a DP-2 or DP-3 policy. It factors in the cost of labor and materials to rebuild your kitchen to today’s standards using comparable materials.

DP-2: Broad Form – You will get coverage for perils in DP-1 plus wind, hail, smoke, falling objects, and a combination of several more. It will depend on the insurance providers who fit your risk profile. Lucky for the people reading this that our agents have access to many companies. Great agents and lots of companies competing for your business are the keys to better insurance.

DP-3: Special Form – This is the comprehensive version of a dwelling fire policy and the foundation of Landlord Insurance. It covers all perils, even those not mentioned above, unless explicitly excluded in the policy.

Please understand that there are many variables to determine dwelling insurance cost, mainly geography and value of the dwelling. Here are some simple estimates:

DP-1: $700-$900 per year

DP-2: $900-$1,100 per year

DP-3: $1,100-$1,300+

Regarding limits, $200,000 to $500,000 are common for dwelling fire policies.

With respect to deductibles, 1,000-$2,000 or 1-2% of the value of the covered peril will be your responsibility. Percentages are more often used for higher-value structures. Each insurance company determines what deductibles to offer.

Your Insuremart agent, presuming you will contact one, will discuss additional coverage to widen your protection. Some options:

Water Backup – Covers sewer backups and sump pump failures.

Loss of Rents/Fair Rental Value – Covers lost rent due to a covered peril like fire or wind.

Other Structures – Your policy will include coverage for an attached garage and sometimes other structures, like detached garages, sheds, and fences. If not, and you want coverage, ask your Insuremart agent about adding Other Structures coverage.

Other add-ons include personal property coverage, to cover your losses, like appliances or furniture. If you purchase all the add-ons mentioned above, along with liability, you would have a solid landlord insurance policy.