When it comes to insuring your property, not all policies are created equal. Many Texans assume “home insurance” and “dwelling insurance” are the same thing, but they serve very different purposes. Understanding the difference is crucial, especially if you own rental properties, investment homes, or vacant houses. When it comes to insuring your property, not all policies are created equal. Many Texans assume “home insurance” and “dwelling insurance” are the same thing, but they serve very different purposes. Understanding the difference is crucial, especially if you own rental properties, investment homes, or vacant houses. In some cases, even homeowners choose dwelling policies over full HO policies because they prefer lower premiums and are comfortable with more limited coverage.
What Is Dwelling Insurance?
Dwelling insurance (sometimes called a DP-1, DP-2, or DP-3 policy) is designed to protect the physical structure of a home. That means the walls, roof, floors, and foundation are covered against risks like fire, wind, hail, or vandalism.
Unlike a homeowners policy, dwelling insurance typically does not cover:
- Personal belongings (furniture, electronics, clothing)
- Liability (lawsuits or injuries on the property)
- Loss of use (if the property becomes uninhabitable)
Types of Dwelling Policies (DP-1, DP-2, DP-3)
Not all dwelling policies are the same. Here’s a quick breakdown:
DP-3 (Special Form) — Often considered “all-risk” for the dwelling, providing the broadest protection. The most popular choice for investors seeking comprehensive coverage.
DP-1 (Basic Form) — Covers only named perils, such as fire or vandalism. Usually the most affordable but least comprehensive.
DP-2 (Broad Form) — Covers more risks, like windstorm, hail, and burst pipes. More balanced for landlords.
How It Differs from Homeowners Insurance
- Homeowners Insurance: Broad coverage that includes the dwelling (Coverage A), other structures (Coverage B), personal property (Coverage C), and loss of use (Coverage D). It also usually includes liability protection.
- Dwelling Insurance: Narrower coverage that primarily focuses on the structure itself.
Put simply: homeowners insurance protects both the home and the people living in it, while dwelling insurance is more property-focused.
When Do You Need Dwelling Insurance?
Dwelling insurance is often the right fit if:
- You own a rental property and tenants live in the home.
- You have a vacant or unoccupied home, which isn’t eligible for standard homeowners coverage.
- You’re a real estate investor insuring multiple properties.
- You’re a homeowner seeking lower premiums and are comfortable with more limited coverage compared to a full HO policy.
Cost Factors for Dwelling Insurance in Texas
Dwelling insurance premiums vary depending on:
- Location — Properties in coastal or flood-prone zones cost more.
- Property Type & Age — Older homes may need higher premiums due to maintenance risks.
- Coverage Type — DP-1 is usually the cheapest, while DP-3 offers the broadest protection at a higher price.
- Occupancy — Vacant properties are considered higher risk and often more expensive to insure.
Real-Life Examples of Dwelling Insurance in Action
An investor with multiple rental units uses a DP-3 policy to protect the structures, while tenants carry their own renters insurance.
A rental home in Houston suffers roof damage from hail. Dwelling insurance covers the structural repairs, but the tenant must rely on renters insurance for personal belongings.
Looking for the right coverage?
At TX Insurance Finder, powered by Hi-Lo Insurance, we help Texans compare policies across multiple carriers. Compare your options on our Home Insurance in Texas page.
