DP-3 Landlord Policy Guide for Florida Rental Properties

If you manage rental properties in Florida, your landlord policy is almost certainly a DP-3 — but most property managers and owners cannot accurately describe what that policy covers, what it excludes, or where the critical gaps are. That knowledge gap costs Florida landlords thousands of dollars every year in unexpected out-of-pocket costs, denied claims, and coverage deficiencies that only surface after a storm.

This guide explains the DP-3 dwelling fire policy from the ground up: what it is, how it differs from other policy forms, what it covers and excludes, and the endorsements every Florida rental property should carry on top of the standard form.

What Is a DP-3 Policy?

DP-3 stands for Dwelling Fire Policy Form 3. It is the most comprehensive of three standard dwelling fire policy forms (DP-1, DP-2, and DP-3) and is the industry-standard coverage form for non-owner-occupied residential properties in Florida — rental homes, investment properties, and seasonal dwellings.

The critical distinction that makes DP-3 valuable: it is an open-perils policy for the dwelling itself. Open perils means that all causes of physical loss to the dwelling are covered unless specifically excluded in the policy. You do not need to prove your loss was caused by one of a list of named perils — the burden is reversed. The insurer must prove that an exclusion applies to deny coverage.

This matters enormously in practice. After a Florida hurricane, damage frequently results from combinations of wind, rain intrusion, flying debris, falling trees, and structural failure. Under an open-perils DP-3, all of these are covered. Under a named-perils form like DP-1, only causes explicitly listed in the policy are covered — and if an adjuster argues your damage was caused by something not on the list, you have no coverage.

What a Standard Florida DP-3 Covers

Coverage A — Dwelling

Coverage A protects the dwelling structure itself: the walls, roof, foundation, permanently attached fixtures, built-in appliances, flooring, and structural systems. This is the core coverage that pays for hurricane roof damage, fire repairs, pipe burst water damage, and structural repairs. Coverage A should be set at the dwelling's replacement cost — what it would cost to rebuild from the ground up at current construction costs, not the market value or the mortgage balance. Florida construction costs have increased significantly since 2020; many older policies are significantly underinsured on Coverage A.

Coverage B — Other Structures

Coverage B covers detached structures on the property: detached garages, fences, sheds, carports, guest houses, and swimming pool enclosures. The standard DP-3 Coverage B limit is 10% of Coverage A. On a $400,000 Coverage A policy, Coverage B provides $40,000 — which may or may not be adequate for a substantial detached garage or pool cage. Fences and pool screens are heavily damaged in Florida hurricanes and often exhaust Coverage B limits quickly.

Coverage C — Personal Property (Landlord's)

Coverage C covers the landlord's personal property at the rental premises — appliances the landlord owns, a window AC unit, blinds, garage door openers, and similar items. It does not cover the tenant's personal property. Tenants must carry their own renters insurance. Most DP-3 policies offer Coverage C on a named-perils basis (not open perils), which means appliance damage from causes not on the named list may not be covered.

Coverage D — Fair Rental Value (Loss of Rents)

Coverage D pays the landlord the rental income lost while the property is uninhabitable due to a covered loss. If a hurricane makes your rental unit uninhabitable for four months during repairs, Coverage D pays your fair rental value for those four months. Standard DP-3 forms include 12 months of Fair Rental Value. In Florida, where post-hurricane repairs routinely take 12–18+ months due to contractor demand, this limit deserves scrutiny — many property managers extend it to 24 months through endorsement.

Coverage E — Additional Living Expense

Less common in landlord policies (it appears more often in homeowner policies), Coverage E pays additional expenses incurred by the policyholder as a result of a covered loss. Some DP-3 forms do not include this coverage at all; it is worth verifying with your broker whether your policy form includes it.

What a Standard Florida DP-3 Excludes

The open-perils structure of a DP-3 does not mean everything is covered. Florida DP-3 policies contain significant exclusions that every property manager must understand.

The Hurricane Deductible: The Most Important DP-3 Number in Florida

Florida DP-3 policies carry a separate hurricane deductible that is percentage-based, not a fixed dollar amount. The hurricane deductible is typically 2% or 5% of Coverage A — meaning it is calculated against the dwelling's insured replacement value, not the loss amount.

On a $350,000 Coverage A policy with a 5% hurricane deductible, the landlord pays $17,500 out of pocket before insurance covers any hurricane damage. On a $600,000 Coverage A property, that same 5% deductible equals $30,000. Property managers who have not calculated this figure for every property in their portfolio are managing a major undisclosed financial risk.

The hurricane deductible is triggered by the named storm deductible clause in the policy — check whether your policy uses a "hurricane" trigger (requires the NHC to name the storm at hurricane strength) or a "named storm" trigger (applies to any NHC-named system, including tropical storms). Named storm triggers are more common in Florida and apply to a wider range of events.

Critical Endorsements Every Florida DP-3 Should Carry

Actual Cash Value vs. Replacement Cost: The Depreciation Gap

DP-3 policies are available in two valuation forms: Actual Cash Value (ACV) and Replacement Cost Value (RCV). This distinction has enormous financial consequences in Florida, where hurricane damage typically affects aging roofs, older HVAC systems, and Florida-specific building components.

ACV pays: Replacement cost minus depreciation. A 15-year-old roof that costs $18,000 to replace may have an ACV of $4,000–$7,000 after depreciation. The owner receives $4,000–$7,000, not $18,000. The gap is the out-of-pocket cost.

RCV pays: The full replacement cost at the time of loss, with no depreciation applied. The same roof would receive $18,000 (minus the deductible). RCV policies are worth the additional premium in Florida because the frequency of hurricane-related roof claims makes ACV policies extremely costly in the long run.

Note: Some Florida insurers now offer ACV-only endorsements on roofs older than 10–15 years, even on RCV policies. Review your declarations page and endorsements carefully — an ACV roof on an otherwise RCV policy creates a significant gap precisely when you need the most coverage.

DP-3 vs. Homeowner Policy (HO-3) for Florida Rental Properties

A common question: can a Florida landlord use a standard homeowner policy (HO-3 or HO-6) for a rental property instead of a landlord-specific DP-3?

The short answer: no. HO-3 policies are designed for owner-occupied residences and typically contain an occupancy clause that requires the policyholder to occupy the home as their primary residence. Renting a property covered by an HO-3 can void the policy entirely or result in a denied claim on the basis that the property's use does not match the policy's underwriting assumptions. Insurers regularly deny claims when they discover a property was being rented under an HO-3.

The DP-3 is specifically designed and priced for non-owner-occupied dwellings. It includes landlord-specific coverages — Fair Rental Value instead of Additional Living Expense — and is underwritten with the assumption that tenants are occupying the property.

Common DP-3 Mistakes Florida Property Managers Make

Insuring at purchase price instead of replacement cost. A $300,000 purchase price does not represent the cost to rebuild a 2,000 square foot home in post-2020 Florida. Current construction costs in South Florida, Tampa Bay, and most of Florida's coastal markets run $200–$350 per square foot for a typical single-family home. A 2,000 SF home requires $400,000–$700,000 in Coverage A — not $300,000. Underinsurance at this level means the insurer can apply a coinsurance penalty and reduce every claim payout proportionally.

Assuming DP-3 open perils means flood is covered. It does not. The flood exclusion is absolute and appears in every standard DP-3 form. Post-hurricane, when damage from storm surge and wind overlap on the same property, the burden falls on the property owner to establish which damage was wind (covered) and which was flood (not covered). Without separate flood coverage, the flood portion of the loss has no recovery pathway.

Not reviewing the policy after roof replacement. A new roof changes your insurer's risk profile, your wind mitigation rating, and potentially your hurricane deductible trigger eligibility. After any major improvement — new roof, impact windows, hurricane straps — request an updated wind mitigation inspection and submit the new report to your carrier. Premium reductions of 15–30% are common after a new qualifying roof.

Missing the ordinance and law gap. Florida updated its statewide building code significantly in 2001 and 2002 following the Andrew-era reforms. Any pre-2002 home that suffers major damage may be required to be rebuilt to current code standards — including hurricane strap requirements, roof-to-wall connections, and electrical upgrades. Without an ordinance and law endorsement, the additional cost of code compliance comes entirely out of pocket.