Can Dwelling Fire Insurance Save You Money? A Closer Look

When it comes to protecting your property, insurance is non-negotiable—but that doesn’t mean you should overpay for coverage you don’t need. Dwelling fire insurance is often overlooked, yet for many property owners, it can be a cost-saving alternative to standard homeowners insurance.

So the big question is: Can dwelling fire insurance actually save you money? The short answer—yes, in the right situations. Let’s take a closer look.

What Is Dwelling Fire Insurance?

Dwelling fire insurance is a property-only insurance policy that covers the structure of a home—but not necessarily the personal contents inside it. It’s ideal for certain situations where full homeowners insurance is unnecessary or too expensive, like rental properties, older homes, or vacant dwellings.

There are three main types of dwelling fire policies:

Policy Type	Coverage Style	Best For
DP-1	Basic form, actual cash value	Vacant or low-value properties
DP-2	Broad form, replacement cost	Seasonal homes or moderate-risk rentals
DP-3	Special form, full coverage	High-value rentals or long-term tenants

When Dwelling Fire Insurance Is Cheaper

Dwelling fire policies tend to cost significantly less than full homeowners insurance because they’re more targeted and customizable. Here's when that works in your favor:

You're a landlord.

You don’t need coverage for your tenant’s belongings—just the building. Dwelling fire insurance gives you structure-only coverage, often for half the price of a homeowners policy.

You Own a Vacant or Seasonal Home

Most standard home insurance won’t cover vacant homes due to increased risk. Dwelling fire policies fill that gap, often at a lower premium than high-risk homeowner's policies.

You Own an Older or Distressed Property

If your property isn’t up to current codes, homeowner's insurance may be expensive or denied altogether. Dwelling fire policies are more flexible and less strict on condition requirements.

Real-World Scenarios That Save Money

• Small Rental Duplex in the Suburbs: A landlord with no need for personal liability or content coverage uses a DP-3 policy and saves over $600 annually compared to a full HO-3 plan.

• Seasonal Lakeside Cabin: The owner only visits 3 times a year. A DP-1 policy covers structural fire and storm damage for a fraction of a homeowner's policy.

When Dwelling Fire Insurance Might Not Be Enough

Savings are great—but only if you’re not sacrificing essential protection. Keep these limitations in mind:

• It doesn’t cover personal belongings (unless added)

• Liability coverage is limited or excluded

• Some policies (like DP-1) only pay out actual cash value, not replacement cost

• It may not satisfy mortgage lender requirements on owner-occupied homes

Tips to Maximize Savings Without Cutting Corners

• Choose the Right Policy Type: DP-1 is the cheapest, but DP-3 offers broader protection. Know what you’re sacrificing.

• Ask About Add-Ons: You can often include loss-of-rent, vandalism, and liability for a small extra cost.

• Work With an Independent Agent: They can compare multiple carriers and find niche policies that fit your exact situation.

• Review Annually: Property use changes, and your policy should too.

Final Verdict: Can It Save You Money?

If you own a rental, vacant, or non-primary residence, dwelling fire insurance could absolutely save you money—sometimes by hundreds per year. But it’s not a one-size-fits-all solution.

The key is knowing what you need—and what you don’t. Don’t pay for coverage that isn’t relevant, but don’t underinsure either. Speak with a licensed agent who can assess your risks and help you make a smart financial choice.