Homeowners Insurance vs. Dwelling Fire: Know the Difference

When it comes to protecting your home in Connecticut, not all insurance policies are created equal. Two commonly misunderstood options are homeowner's insurance and dwelling fire insurance. While both offer coverage for physical damage to a residence, they serve very different purposes and suit different types of property owners and situations.

In this guide, we’ll break down the differences, help you understand when each is appropriate, and show you how to make the right choice based on your needs.

What Is Homeowner's Insurance?

Homeowners' insurance is a comprehensive policy designed for owner-occupied homes. It typically includes protection for:

• The structure of your home (dwelling)

• Personal belongings (contents)

• Liability in case someone is injured on your property

• Additional living expenses (ALE) if you're displaced due to a covered loss

There are several types of homeowner's policies (HO-1 through HO-8), but HO-3 is the most common for single-family homes. It’s an “open peril” policy for the structure, meaning it covers any damage unless it’s specifically excluded.

What It Covers (HO-3 Policy Example):

Coverage Type	Description
Dwelling	Damage to the home’s structure from covered perils (fire, wind, hail, etc.)
Other Structures	Detached garages, sheds, fences
Personal Property	Your belongings (furniture, clothing, electronics)
Loss of Use	Hotel/rental costs if the home is uninhabitable after a claim
Personal Liability	Lawsuits for bodily injury or property damage
Medical Payments	Medical costs if someone is injured on your property

What Is Dwelling Fire Insurance?

Dwelling fire insurance is a more limited policy typically used for non-owner-occupied properties, such as rental homes, seasonal homes, or vacant houses. It focuses primarily on protecting the structure itself, rather than its contents or liability.

There are three common forms:

• DP-1: Basic form (named perils, actual cash value)

• DP-2: Broad form (more perils, replacement cost options)

• DP-3: Special form (open perils for the structure, similar to HO-3)

What It Covers (DP-1 vs. DP-3 Comparison):

Feature	DP-1 (Basic)	DP-3 (Special)
Covered Perils	Named perils only (e.g. fire, lightning, internal explosion)	Open perils (everything unless excluded)
Structure	✅	✅
Personal Property	Optional	Optional
Loss of Rents	Optional	Optional
Liability Coverage	Not included by default	Optional
Valuation	Actual cash value	Replacement cost available

Key Differences: Homeowners vs. Dwelling Fire Insurance

Feature	Homeowner's Insurance (HO-3)	Dwelling Fire Insurance (DP Policies)
Intended Use	Owner-occupied homes	Rental, seasonal, or vacant homes
Coverage Scope	Structure + contents + liability + ALE	Structure (contents and liability optional)
Perils Covered	Open perils (for structure)	Named perils (DP-1/2) or open perils (DP-3)
Pricing	Higher premium (more coverage)	Lower premium (fewer coverages)
Customization	More included coverages	Requires add-ons for full protection

When Should You Choose Dwelling Fire Insurance?

Dwelling fire insurance is ideal if:

• You rent out your property (as a landlord)

• You own a vacant home under renovation

• You have a seasonal or secondary home

• You don’t need coverage for personal belongings or liability

For example, if you’re a landlord in Hartford, Connecticut, and rent out a duplex, a DP-3 policy can give you structural coverage and loss-of-rent protection—without paying for personal contents coverage you don’t need.

If you're unsure about Connecticut’s legal requirements for landlord coverage, the Connecticut Insurance Department is a reliable resource.

When Should You Choose Homeowner's Insurance?

Homeowner's insurance is right for:

• Your primary residence

• Homes with valuable personal belongings

• When you want liability protection

• If you need loss of use coverage for alternative living arrangements

In short, if you live in the home, need coverage for your belongings, and want broader protection, homeowners insurance is the better fit.

How Much Does Each Cost in Connecticut?

Policy Type	Average Annual Premium (CT)*
HO-3 (Homeowner's)	$1,350 – $1,850
DP-3 (Dwelling Fire)	$800 – $1,200

*Source: National Association of Insurance Commissioners (NAIC) 2023 Data ReportPremiums vary based on location, home value, deductible, and coverage limits.

Final Thoughts: Choose Based on Use, Not Just Cost

Don’t let the lower cost of dwelling fire insurance sway you if you live in the home or keep valuables inside. Likewise, don’t overpay for homeowner's insurance if the property is a rental or vacant.

If you’re unsure, speak with a licensed independent insurance broker in Connecticut who can assess your property and recommend the right policy.

Need Help Finding the Right Policy?

At Insure Connecticut LLC, we help homeowners, landlords, and property investors across the state get the right protection, whether it’s a full homeowners policy or a tailored dwelling fire plan.

Give us a call today for expert guidance on your coverage options.

(860) 970-0977

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Frequently Asked Questions (FAQs)

1. What is the main difference between homeowner's insurance and dwelling fire insurance?

The main difference is that homeowner's insurance covers both the home and the contents inside, as well as liability and additional living expenses. Dwelling fire insurance (DP policies) focuses primarily on the structure of the property, with limited or optional coverage for contents and liability. It’s typically used for non-owner-occupied properties like rentals or vacant homes.

2. Can a landlord in Connecticut use a homeowner's insurance policy?

No. Homeowner's insurance is intended for owner-occupied residences. If you’re renting out a home, you should get a dwelling fire policy (usually DP-3) specifically designed for rental properties. Using the wrong policy could result in a denied claim.

3. Does dwelling fire insurance cover personal belongings?

By default, dwelling fire insurance does not cover personal property unless you add it as an endorsement. This is suitable for landlords who don’t keep personal belongings on-site. If you live in the property or store valuables there, you’ll need to request content coverage or consider homeowners insurance.

4. Is liability insurance included in a dwelling fire policy?

Not automatically. Liability coverage is typically optional in dwelling fire insurance policies. You can add a landlord liability endorsement to cover tenant injuries or property damage you may be held responsible for.

5. Which is cheaper in Connecticut: homeowner's insurance or dwelling fire insurance?

Dwelling fire insurance is usually less expensive than homeowners insurance because it covers fewer risks and doesn’t automatically include contents, liability, or loss of use. However, the cost varies based on the type of DP policy (DP-1, DP-2, or DP-3), the home’s condition, and its location.