What You Need to Know
Protect Your Property with the Right Coverage
When it comes to insuring properties that aren’t your primary residence, like rental homes, vacation properties, or homes under renovation, dwelling insurance is the solution.
In Montana, dwelling policies are designed to protect structures and properties that may not qualify for traditional homeowners’ insurance, offering coverage tailored for various situations.
What is Dwelling Insurance?
Dwelling insurance covers the structure of your property, offering protection against damages from specific perils like fire, windstorms, and vandalism.
Unlike homeowners’ insurance, dwelling policies do not require the property to be owner-occupied and are ideal for rental properties, older homes, and vacation homes in rural areas.
These policies can be customized with additional coverage options like theft and liability, which can be added by endorsement.
Who Needs a Dwelling Insurance Policy?
A dwelling policy is perfect for:
- Landlords renting out their properties
- Vacation homes and cabins
- Dwellings under construction
- Mobile homes that meet certain qualifications
- Properties with up to four units, including boarders
- Vacant properties or homes that don’t qualify for standard homeowners insurance
It’s important to note that farm dwellings are not eligible for coverage under these policies.
Types of Dwelling Policies (Forms)
There are three main types of dwelling policies, each offering different levels of protection:
DP-1: Basic Form
- Covers the structure against specific perils such as fire, lightning, and internal explosion.
- Additional perils (e.g., wind, hail, smoke) can be added for an extra premium.
- Settlement: Losses are paid on an actual cash value (ACV) basis, which factors in depreciation.
DP-2: Broad Form
- Includes all DP-1 coverages plus additional perils such as burglary, falling objects, and freezing pipes.
- Settlement: Covers losses on a replacement cost basis for the dwelling, meaning no depreciation deduction.
DP-3: Special Form
- Offers the most comprehensive coverage, protecting against all risks of direct physical loss unless specifically excluded.
- Settlement: Like DP-2, losses are paid on a replacement cost basis for the dwelling.
Dwelling Policy Coverages
Dwelling policies are flexible and allow you to select from various coverages depending on your needs:
- Coverage A – Dwelling: Covers the structure of your home and any attached structures (e.g., garage).
- Coverage B – Other Structures: Insures detached structures on your property, like sheds or fences.
- Coverage C – Personal Property: Covers personal belongings on the premises. However, tenant property is not covered.
- Coverage D – Fair Rental Value: Provides compensation if a covered loss makes your rental property uninhabitable.
- Coverage E – Additional Living Expenses: Available with DP-2 and DP-3 policies, this covers costs like hotel stays and dining if you need to move out while repairs are made.
Additional Benefits and Endorsements
Optional Endorsements
Theft and Personal Liability: These coverages are not automatically included but can be added by endorsement to protect against theft or personal injury claims.
Mobile Home Coverage: For mobile homes on permanent foundations, this endorsement extends coverage to mobile dwellings.
Other Important Coverages
- Debris Removal: Pays for removing debris after a covered loss.
- Fire Department Service Charge: Covers up to $500 for fire department charges when called to protect your property.
- Trees, Shrubs, and Plants: DP-2 and DP-3 policies cover damage to landscaping, up to 5% of Coverage A.
- Glass Breakage: Covers damage to windows or safety glazing materials.
How Do DP-1, DP-2, and DP-3 Compare?
| Feature | DP-1: Basic Form | DP-2: Broad Form | DP-3: Special Form |
| Perils Covered | Fire, lightning, internal explosion & can extend coverage | Basic perils + burglary, freezing & more | Open peril for dwelling; named peril for personal property |
| Settlement | Actual Cash Value (ACV) | Replacement cost for dwelling | Replacement cost for dwelling |
| Other Structures | Optional (10% of Coverage A) | Included (10% of Coverage A) | Included (10% of Coverage A) |
| Additional Living Expenses | Optional (endorsement) | Included (10% of Coverage A) | Included (10% of Coverage A) |
| Theft & Liability | Optional (endorsement) | Optional (endorsement) | Optional (endorsement) |
Dwelling Policy Endorsements
Enhance your policy with additional protections:
- Residential Theft Coverage Endorsement: Protects against theft, vandalism, and attempted theft.
- Automatic Increase in Insurance: Automatically increases Coverage A and B limits annually to account for inflation.
- Dwelling Under Construction Endorsement: Provides coverage while a home is being built.
Frequently Asked Questions
Q: Does dwelling insurance cover rental properties?
A: Yes, dwelling insurance is perfect for rental properties, covering the structure and offering optional add-ons for personal liability and rental income protection.
Q: What is the difference between DP-1 and DP-3 policies?
A: DP-1 is a basic form that covers specific named perils and settles claims on an actual cash value basis. DP-3 offers broader coverage, including open perils, and pays claims on a replacement cost basis for the dwelling.
Q: Can I insure a vacant property with dwelling insurance?
A: Yes, dwelling insurance is ideal for vacant properties, especially those that may not qualify for homeowners insurance.
Q: Does dwelling insurance cover personal belongings?
A: Personal property coverage is available, but it’s optional. If the property is rented, the tenant’s belongings are not covered.
Q: What is fair rental value coverage?
A: Fair rental value coverage compensates you for lost rental income if your property becomes uninhabitable due to a covered loss.
We Can Help You Get What You Need!
At Armor Insurance Agency, we understand the unique needs of Montana homeowners and property investors.
Whether you’re looking to insure a rental property, vacation home, or a property under construction, we’re here to help you find the right dwelling insurance policy.
Contact us today to learn more and get the protection you need.