What’s the Difference Between a DP3 and a HO3? – IA Magazine

If home insurance policy forms had dating profiles, the HO3 would say: “Looking for a long-term relationship with an owner-occupant.
I love stability, family photos on the walls, and someone who actually lives here.” Meanwhile, the DP3 would be like:
“I’m chill with long-distance. Tenants? Sure. Vacant between leases? We can talk. I’m here for the buildingmostly.”

Jokes aside, choosing the right policy form matters because it changes what’s automatically included, what you’ll need to add,
and what kinds of claim surprises you’re most likely to encounter. This guide breaks down how DP3 and HO3 policies differ,
who each is designed for, and how to avoid the classic insurance mix-up: insuring a rental like you live in it (or insuring your primary home like you don’t).

First, What Are DP3 and HO3?

HO3 (Homeowners 3 / Special Form)

An HO3 is the most common homeowners policy form for an owner-occupied home. It’s built to cover:
the structure, your personal belongings, and everyday homeowner “what-ifs” like someone slipping on your front steps.
It typically uses open-perils (special form) coverage for the dwelling (meaning it covers direct physical loss unless excluded),
while your personal property is usually covered on a named-perils basis (only covered for listed causes of loss).

DP3 (Dwelling Property 3 / Special Form)

A DP3 is a dwelling policy form commonly used for non-owner-occupied propertythink rentals, tenant-occupied homes,
and sometimes certain secondary or seasonal properties depending on the insurer. Like HO3, DP3 typically insures the dwelling on an
open-perils basis (subject to exclusions). Where it often differs: it’s oriented toward the property owner’s interest in the structure,
not the lifestyle of living there.

The Quick Answer: Who Should Use Which?

• HO3: Best fit when you (the policyholder) live in the home as your primary residence.
• DP3: Best fit when the home is rented to others (or otherwise not owner-occupied).

That occupancy difference is the “hinge” everything swings on. It influences underwriting, pricing, what coverages are built in,
and how claims get adjusted.

DP3 vs HO3: Side-by-Side Comparison

The Biggest Practical Differences (Where People Get Burned)

1) Personal Property: Whose Stuff Is It, Anyway?

With an HO3, personal property coverage is centralfurniture, clothing, electronics, kitchen gear, and the mysterious box labeled “Cables”
that everyone owns for some reason. The policy is designed around the assumption that your stuff is in the home.

With a DP3 on a tenant-occupied rental, the insurer generally assumes the tenant owns the contents. That means:
the tenant’s belongings are not covered by your DP3 (they need renters insurance). As the landlord, you might insure:
appliances you own, maintenance equipment stored on-site, or furnishings if it’s a furnished rentaldepending on how you set up Coverage C
and endorsements with the carrier.

Example: You rent a home to a tenant. A kitchen fire damages the cabinets and the tenant’s sofa.

• The cabinets (part of the dwelling) are typically your DP3 territory.
• The sofa is typically the tenant’s renters policy territorynot yours.

2) Liability: HO3 Usually Includes It; DP3 Might Not (or Might Differ)

An HO3 commonly includes personal liability coverage and medical payments coverage because homeowners have guest traffic:
friends, delivery drivers, neighborhood kids, the occasional in-law pop-in. Liability coverage is a core feature.

A DP3 is often used for landlord risks, and liability treatment varies by insurer. Some landlord programs package liability;
others require a separate policy or endorsement. The takeaway is simple:
never assume landlord liability is automatically included just because “it’s insurance.”

Example: A tenant’s guest trips on a broken step you failed to repair and gets injured.

• If you have landlord liability coverage (whether bundled or separate), it may respondsubject to conditions and exclusions.
• If you don’t, you may discover the hard way that “I thought it was included” is not an insurance payment method.

3) Loss of Use vs. Loss of Rents: Different “Pain Points”

With an HO3, loss of use typically focuses on Additional Living Expense (ALE)helping pay for temporary housing and
extra costs if a covered loss makes your home unlivable.

With a DP3 on a rental, the landlord’s pain is often lost income. Many DP3 forms emphasize fair rental value
(commonly called loss of rents) when a covered loss makes the rental unit unfit for normal use during repairs.
That does not mean it covers tenants who stop paying rent for unrelated reasonsthis is typically tied to a covered property loss.

Perils and Coverage Triggers: “Open Perils” Isn’t “Everything”

Both HO3 and DP3 commonly provide open-perils coverage on the dwelling. That sounds like “everything is covered,” but it really means:
the dwelling is covered for direct physical loss unless excluded.

Common exclusions to keep in mind

• Flood typically requires a separate flood policy.
• Earthquake typically requires an endorsement or separate policy.
• Wear and tear / lack of maintenance generally isn’t covered.
• Intentional loss is not covered (also: don’t do that).

Also, pay attention to how “water damage” is described and limited. Many policies distinguish between sudden, accidental events (like a burst pipe)
versus long-term seepage or repeated leakage.

Coverage Buckets: What Each Policy Usually Organizes Differently

HO3: Typical coverage components

• Coverage A (Dwelling): the house structure
• Coverage B (Other Structures): detached garage, fence, shed
• Coverage C (Personal Property): your belongings
• Coverage D (Loss of Use): ALE and related items
• Coverage E (Personal Liability) and Coverage F (Medical Payments): liability basics

DP3: Typical coverage components

• Coverage A (Dwelling) and Coverage B (Other Structures): landlord’s structure risk
• Coverage C (Personal Property): may be limited or tailored (often not tenant property)
• Fair Rental Value / Loss of Rents: commonly important for rentals
• Liability: may be included or may require additional steps depending on insurer/program

Translation: HO3 is built like a “home life bundle.” DP3 is built like a “property ownership bundle,” often with landlord-focused options.

Claims Scenarios: Same Disaster, Different Insurance Experience

Scenario A: Windstorm damages the roof

HO3: Dwelling coverage may respond, subject to deductible and exclusions. If the home is unlivable, ALE may help with temporary living costs.

DP3: Dwelling coverage may respond. If the tenant must move out during repairs, loss of rents/fair rental value may apply if included,
typically for the time reasonably required to repair/replace after a covered loss.

Scenario B: Theft of personal items

HO3: Personal property coverage often applies (named-perils basis), subject to limits and sublimits.

DP3: The tenant’s stolen items are generally the tenant’s problem (renters insurance). Your coverage depends on what you insured as owner property.

Scenario C: Someone gets injured on the property

HO3: Personal liability and medical payments are typically part of the package.

DP3: Liability depends on your landlord liability setupnever assume it’s identical to HO3.

Endorsements and Upgrades: Where the “Right Policy” Gets Personal

The form type matters, but the final outcome depends on what you add (or don’t add). Common decision points include:

• Replacement cost vs actual cash value (especially for roof and personal property)
• Ordinance or law coverage (code upgrades after a loss)
• Sewer or drain backup endorsements
• Scheduled personal property for valuables (more common on HO3)
• Landlord packages that combine property + liability for DP3-style risks

One practical rule: don’t force a DP3 to become an HO3 by piling on endorsements just because you started with the wrong form.
Start with the form that matches occupancy and usage, then tailor.

So Which One Should You Choose?

Choose HO3 if you live there, keep your personal property there, and want the standard homeowners coverage mix.
Choose DP3 if the home is primarily a rental property and you need structure-focused coverage plus landlord-style options like loss of rents.

A fast checklist

• Do you live there most of the time? If yes, HO3 is the typical starting point.
• Is it tenant-occupied (long-term or short-term)? DP3 or a landlord program is often the right lane.
• Are you counting on liability coverage? Confirm how it’s provided under the form/program.
• Do you need loss of rents? DP3-style setups often address this directly.
• Are you trying to cover tenant belongings? Don’t. Encourage renters insurance instead.

Conclusion

The difference between DP3 and HO3 is less about which one is “better” and more about which one matches reality.
HO3 is built for owner-occupied life: your stuff, your liability, your extra living costs when life goes sideways.
DP3 is built for property ownership when someone else lives there: structure-first coverage, landlord-focused loss of rents,
and liability handled by program design rather than assumption.

Get the occupancy right, confirm liability, and don’t let “I thought that was included” become your most expensive sentence.

Experience Corner: Real-World Lessons From DP3 vs HO3 Mix-Ups (Extra Notes)

Most DP3 vs HO3 headaches don’t come from exotic disastersthey come from totally ordinary life events paired with one wrong assumption.
Here are a few “been-there” style situations that repeatedly show up in real claims conversations and policy reviews.

The “My Tenant’s Stuff Should Be Covered” Moment

A landlord buys a DP3, a tenant moves in, and months later a pipe breaks. The landlord handles the repairs to drywall and flooring,
and then the tenant asks, “What about my couch and laptop?” The landlord confidently replies, “Don’t worrymy insurance has it.”
That confidence lasts right up until the claim is reviewed. The tenant’s personal property is typically not the landlord’s insurable interest,
and the landlord’s policy is not designed to cover it. The clean solution is proactive: landlords encourage renters insurance at lease signing,
and tenants understand that their belongings need their own policy.

The Liability Gap That No One Notices Until Someone Falls

Another common story: the property is insured under a DP3, but the landlord never double-checks whether liability coverage is included,
or assumes it mirrors an HO3. Then someone slips on uneven steps or is injured by a loose handrail. Suddenly the conversation is not
“How much is the deductible?” but “Do we even have coverage for this?” Landlord liability is absolutely insurable, but it may be packaged
differently than homeowners liability. The practical lesson: confirm liability limits, confirm who is an insured, and confirm whether the
policy is a true landlord program or a property-only structure policy.

Loss of Rents Isn’t “My Tenant Didn’t Pay” Insurance

Landlords often hear “loss of rents” and imagine it covers missed rent payments for any reason. In many DP3-style setups, loss of rents
is tied to a covered property loss that makes the unit unfit for normal use. In other words: if a covered fire forces the tenant out during repairs,
the policy may respond for the repair period. If the tenant simply stops paying, moves out early, or the market softens, that’s a business risk,
not a covered physical-loss event. This distinction matters for budgeting because it prevents an unpleasant surprise right when cash flow is already stressed.

The “I Live Here… Sometimes” Gray Zone

Some properties don’t fit neat labels: a homeowner moves out temporarily, rents the home for a year, then returns. Or a “second home” is used
heavily by family and occasionally rented. In these gray zones, people sometimes keep an HO3 because it feels familiar, even when occupancy changes.
Insurers care about owner-occupied versus tenant-occupied because it changes frequency and type of claims. The best practice is boring but powerful:
when usage changes, update the insurancedon’t wait for renewal and don’t wait for a claim to “test” whether it matters.

The Quiet Win: Matching the Form to Reality

The best experiences aren’t dramaticthey’re the quiet claims that go smoothly because the policy matched the property.
A rental has a covered loss, repairs start quickly, the landlord gets reimbursed for covered damage, and loss of rents helps keep
the financial plan intact. Or an owner-occupied home has a covered incident and ALE reduces the stress of temporary housing.
These wins rarely go viral, but they’re exactly what insurance is supposed to do: replace chaos with a plan.