Two landlord policies on the same house can look almost identical on the first page and pay completely differently at a claim. The reason is usually the policy form. The difference between a DP1 and a DP3 is not jargon for its own sake; it decides which losses are covered at all, and combined with the settlement basis, it decides how much of a covered loss you actually get paid. Most owners have never checked which form they carry. Here is how to tell, and why it matters.
Named perils versus open perils
The core difference comes down to how each form decides what is covered.
A DP1 is a named-perils form. It covers only the causes of loss specifically listed in the policy. If a peril is not on the list, it is not covered, full stop. The list on a basic form is short.
A DP3 is an open-perils form. It flips the logic: it covers all causes of loss except the ones specifically excluded. That is a much broader promise, because anything the policy does not carve out is covered.
In practice, the DP3 covers a wide range of losses you would have to hope were itemized on a DP1. For most rentals, that breadth is the difference between a clean claim and an argument over whether your specific loss made the list. There is also a DP2, which sits in the middle as a broader named-perils form, but the meaningful comparison for most investors is DP1 versus DP3.
The settlement basis stacks on top
Form is only half the story. The other half is how the policy pays once a loss is covered.
Replacement cost pays what it costs to repair or replace the damage. Actual cash value pays the depreciated value, which on an older roof or structure can be a fraction of the real bill. These two issues compound. The cheapest landlord quotes are frequently a DP1 on an actual cash value basis, which means fewer covered perils and a smaller payout on the ones that are covered. That combination is exactly how a low premium turns into a disappointing claim, and it is one of the coverage gaps that cost landlords the most.
How to tell which one you have
Pull your declarations page. The form is usually printed there, noted as DP1, DP2, DP3, or a carrier’s named equivalent. While you are looking, find the settlement basis on the dwelling and the roof, and note whether it says replacement cost or actual cash value. Those two facts, the form and the basis, tell you most of what you need to know about how your policy would actually perform.
If you cannot find it or cannot tell, that is normal. It is one of the first things a coverage review reads off the policy for you.
Choosing the right form on purpose
For most rentals, a DP3 on a replacement-cost basis is the stronger policy, and the premium difference over a narrower form is often smaller than owners expect, which our guide on what landlord insurance costs gets into. A DP1 has its place for certain older, vacant, or hard-to-place properties, but it should be a deliberate choice, not the accidental result of shopping on price alone.
The takeaway is simple: do not compare two landlord quotes on premium until you know you are comparing the same form on the same settlement basis. Until then, the cheaper number may just be a narrower policy wearing a better price tag.