The DP3 refers to an insurance policy on a residential building, usually rented to others. The HO3 is reserved for homeowners, but not exclusively for single-family homes.
If you own a multi-family (2-4 family) property and live in one of the units, then you can usually use the tried, true, and tested HO-3 homeowners policy to cover the entire building, your contents (your stuff), and your own personal liability exposure.
However, if the owner does not live at the property, a homeowners policy won’t work; use a “Dwelling Fire Policy” to protect your interests properly. The most popular dwelling fire policy is the DP-3.
The DP-3 is popular because it is an “Open Peril” policy that covers losses to the home’s structure, loss of use or rental coverage, and usually a personal liability. Contents (also known as personal property, such as furniture or appliances) are NOT automatically included the same way as in the homeowner’s policy but can be added.
If the owner ensures a rental property with an HO-3 but lives elsewhere, it’s a bad fit; you risk NOT being covered for losses. Work with a professional agent to steer you clear of such mistakes. Most rental 1-2 and 3-family properties that are not owner-occupied are insured under the DP-3. The table below compares features of the HO-3 to the DP-3.
Buildings with 3 and more families are most often insured through a commercial policy rather than either the DP-3 or HO-3 (though some insurance companies will insure up to a 4-family building using a DP-3). The most common approach with these larger buildings is a package which includes automatically both property coverage (for the building), lost rents, and liability protection in case you are sued.