The Good (DP-2) vs. The Best (DP-3) Landlord Insurance Policy.
The Subtle but Critical Upgrade to “All-Risk.”
A DP-2 policy is a good, solid landlord policy. It’s much better than a DP-1. But a DP-3 is the best. The DP-2 covers a long list of specific, “named perils.” The DP-3, however, is an “open peril” or “all-risk” policy. This means it covers everything unless it is specifically excluded. That subtle shift from a list of what’s covered to a list of what’s not covered provides a massively broader and superior level of protection.
The “Weight of Ice and Snow” Clause: A Named Peril Covered by DP-2 but Irrelevant in a DP-3.
Why Worry About the List When You Can Cover Everything?
A DP-2 “Broad Form” policy has a list of about 18 covered perils, including things like “weight of ice and snow” and “accidental discharge of water.” This is good. But with a DP-3 “Special Form” policy, you don’t have to worry about the list. Because it’s an “open peril” policy, damage from the weight of ice and snow is automatically covered unless it’s specifically excluded (which it never is). The DP-3 makes the long list of named perils irrelevant.
Why the “Open Peril” Nature of a DP-3 Makes It Superior in Every Way.
Protection Against the Bizarre and the Unforeseen.
Life is weird. Strange things happen. A satellite could fall from the sky and hit your roof. A deer could crash through a sliding glass door. A vandal could spray paint your siding. None of these things are on the “named peril” list of a DP-2 policy. They would not be covered. But with a DP-3 “open peril” policy, all of these bizarre, unforeseen events are covered, because they are not on the short list of exclusions. It protects you from the unknown.
DP-2 is a Long List of Things That ARE Covered. DP-3 is a Short List of Things That AREN’T.
The Power of a Reversed Contract.
This is the philosophical difference. A DP-2 (Named Peril) policy puts the burden of proof on you. You have to prove that your damage was caused by one of the perils on the list. A DP-3 (Open Peril) policy flips the burden of proof to the insurance company. They have to pay the claim unless they can prove that the damage was caused by one of the specific perils on the short exclusion list. This is a much more powerful and consumer-friendly position to be in.
A Side-by-Side Comparison: A Bizarre Claim That a DP-2 Denied but a DP-3 Paid.
The Tale of the Exploding Grill.
My landlord friend had a tenant whose propane grill malfunctioned and exploded on the back deck, causing significant scorch and smoke damage but no actual fire. His DP-2 policy denied the claim because “explosion of a gas grill” was not a “named peril.” My DP-3 policy would have covered the exact same event. Why? Because it covers all risks, and “grill explosion” was not on my policy’s short exclusion list. That subtle difference in policy language was the difference between a paid claim and a total loss.
The Cost Difference is Minimal. The Coverage Difference is Massive.
The Best “Value Upgrade” in Insurance.
The difference in the annual premium between a DP-2 and a DP-3 policy for the same property is often incredibly small, sometimes as little as 5-10%. For that tiny additional cost, you are making a massive upgrade in your quality of coverage. You are moving from a restrictive “named peril” policy to a broad “open peril” policy. There is almost no other place in the world of insurance where you can buy so much more protection for such a small additional investment.
Why Smart Landlords Always Choose a DP-3 for Their Rental Properties.
It’s the Professional Standard for a Reason.
Experienced, professional real estate investors and landlords understand that a rental property is a serious business and a valuable asset. They know that strange, unforeseen events happen. They would never risk their investment with a restrictive, “named peril” policy. They always opt for the superior, comprehensive protection of a DP-3 “open peril” policy. It is the professional standard for a reason. It is the only policy that provides the level of protection a serious investor demands.
The Burden of Proof is on YOU with a DP-2. It’s on the Insurance Company with a DP-3.
Who Has to Do the Work in a Claim?
This is a critical legal distinction that you feel in the real world of a claim. With a DP-2, if you have a strange water damage claim, you have to prove that it was caused by a “named peril” like a burst pipe. With a DP-3, the insurance company has to pay for the water damage unless they can prove it was caused by an exclusion like a long-term leak. This shift in the burden of proof makes the claims process much smoother and fairer for the policyholder.
Stop Trying to Save $10 a Month on Your Most Valuable Asset.
Don’t Be Penny Wise and Pound Foolish.
The choice between a DP-2 and a DP-3 is a clear test of financial priorities. Trying to save what often amounts to less than $10 a month by choosing the inferior coverage of a DP-2 policy is a classic case of being “penny wise and pound foolish.” Your rental property is a massive financial asset. It deserves the best possible protection. The small, almost unnoticeable extra cost for a DP-3 is an investment in certainty and peace of mind.
The Jargon-Free Guide to Why “All-Risk” (DP-3) Beats “Named Peril” (DP-2) Every Time.
Do You Want a List of What’s Covered, or a List of What’s Not?
Let’s make it as simple as possible. Do you want a policy that says, “We only cover these 18 things, and if your problem isn’t on this list, you’re on your own”? That’s a DP-2. Or do you want a policy that says, “We cover absolutely everything that could possibly happen to your property, except for these few specific things like floods or war”? That’s a DP-3. One is a list of permissions. The other is a blanket of protection. The choice is obvious.