Owning a home or secondary property, such as a cabin, means finding the proper insurance coverage for it. Fire claims are among the most expensive and so coverage is essential for all dwellings. Initially, it may seem like homeowners insurance and dwelling fire insurance are similar, but both policies are designed to cover two different types of properties. At RCU Insurance Services, we’re here to help you find the best policy for your property.
What Does a Homeowners Insurance Policy Cover?
Homeowners insurance is designed for owner-occupied properties like a family-style home. Your home and possessions and surrounding structures will be covered under homeowners insurance in the event of loss or damage by a variety of possible incidents. Mortgage lenders often require this coverage as part of your mortgage agreement. Even if you’re not required to purchase homeowners insurance, you may want to consider this policy to prevent financial burden from an unexpected disaster.
Additional coverage is available when deemed fit and includes:
- Debris removal
- Emergency removal of property during times of risk
- Trees, shrubs, and other plants
- Inflation protection
Homeowners insurance is not a one-size-fits-all policy, so it’s important to talk to your agent at RCU Insurance Services to find the coverage that best suits your needs.
What Does a Dwelling Fire Policy Cover?
Unlike homeowners insurance, dwelling fire policy provides coverage to homes aside from your primary residence. These properties could include vacation homes, cabins or investment homes such as rentals. Dwelling fire policies will cover costs such as repairs or rebuilding if fire damage occurs. Structures like decks, porches and attached garages are protected under this coverage as well. Unlike homeowners insurance, dwelling fire policy does not provide protection for possessions inside of the home or dwelling.
As with most insurance policies, dwelling fire policy has different levels of coverage. The following are three types of coverage offered:
DP-1: Basic Form
A claim filed under this policy coverage is automatically cash value (ACV). This covers damages due to the following:
- Lightning strike
- Internal explosions
Policy add-ons may be available upon request and as needed.
DP-2: Broad Form
A broad form policy offers more coverage than a basic form policy and automatically settles claims on replacement cost value. The following coverage is typically provided in addition to the protections afforded by a basic form policy:
- Vandalism and malicious mischief
- Weight of ice and snow
- Glass breakage
- Burglary damage
- Falling objects
- Frozen pipes
- Accidental discharge or overflow of water or steam
- Electrical damage
Loss of rent coverage in the event tenants are required to move out while the landlord repairs the home from a covered loss
DP-3: Special Form
This policy offers the most coverage for your home. DP-3 is an open perils policy that covers all types of damage expect for the following exclusions:
- Laws and ordinances
- Water damage
- Intentional loss
- Mold, rust and rot
When Should I Use Dwelling Fire Policy Instead of Homeowners Insurance Policy?
Homeowners insurance is the best policy choice for the primary home you reside in. If you have other residences that aren’t occupied year-round but still need some basic coverage in the event of damage, such as a fire, a dwelling fire policy may be the best choice. There are several situations in which dwelling fire insurance instead of homeowners insurance:
- Owner-occupied residences – If you have a bad credit report, a history of claims or property that is in poor condition, it may be difficult to get homeowners insurance. A dwelling fire policy may help you to have coverage for your home in the event of a fire.
- Secondary residences – If you own a vacation home or a cabin that you only visit short periods of the year you still need protection against the risks of fire damage. Fire dwelling coverage provides coverage for secondary homes.
- Investment properties – Protection for rental properties is one of the most common uses for fire dwelling insurance. Fire dwelling insurance provides relocation funds for tenants and provides you with loss of rental income coverage in incidents such as a fire.
- Vacant homes – A home that’s up for sale or undergoing repairs can benefit from a fire dwelling policy. Electrical shorts, vandalism and lightning strikes that could result in a fire are all covered under a fire dwelling policy.
Contact Us Today!
At RCU Insurance Services, we want to ensure you get the proper coverage needed for your properties. Contact us today to get in touch with an agent that can get you started.