If you don't live in the property, you can't use a homeowners policy.That includes rental houses, vacation homes, inherited properties, and vacant homes. Dwelling fire policies are designed specifically for properties you own but don't occupy.
Who Needs a Dwelling Fire Policy?
- Landlords: Any property rented to tenants (long-term or short-term)
- Vacation home owners: Second homes occupied only part of the year
- Inherited property: Homes you inherited but don't live in
- Vacant/under renovation: Properties being prepared for sale or renovation
- Real estate investors: Any investment property in your portfolio
What DP-3 Covers
- Dwelling: The structure itself — walls, roof, foundation, built-in fixtures
- Other structures: Detached garage, shed, fence (typically 10% of dwelling)
- Fair rental value: Lost rental income if the property is uninhabitable after a covered loss
- Liability: If a tenant or visitor is injured on the property due to your negligence
- Your personal property: Appliances and furnishings YOU provide (washer, dryer, etc.)
What DP-3 Does NOT Cover
- Tenant's belongings: Tenants need their own renters insurance
- Floods: Separate flood policy required (same as homeowners)
- Normal wear and tear: Maintenance is your responsibility as landlord
- Intentional damage by tenants: This is a landlord-tenant legal matter, not an insurance claim
- Short-term rental platforms: Airbnb/VRBO may require specialized commercial coverage
Landlord Must-Have Endorsements
- Sewer backup: $50-$100/year — same importance as homeowners
- Landlord liability umbrella: Extra liability protection above the DP-3 limits
- Ordinance or law: Covers rebuilding to current code (critical for older properties)
- Equipment breakdown: Covers HVAC, water heater, and appliance failures
Require Tenants to Have Renters Insurance
Include a lease requirement for tenants to maintain renters insurance with:
- At least $100,000 liability coverage
- YOU listed as an "interested party" (you get notified if they cancel)
- This protects tenants' belongings AND reduces your liability exposure
- Renters insurance costs tenants $15-$30/month — reasonable lease requirement
Bottom line: If you own rental property, you need a DP-3 policy — not a homeowners policy. It covers the structure, lost rental income, and your liability. Require tenants to carry renters insurance. An independent agent with 50+ carriers can find competitive landlord coverage for your specific property.