Moving out and renting your house? Your standard homeowners policy likely voids the moment a paying tenant moves in — you need to switch before they do. This guide covers the difference between an HO-3 (homeowners), a DP-3 (dwelling fire), and a landlord package — what each covers, who needs which, and how to make the switch correctly.
Landlord insurance — most commonly issued as a DP-3 Dwelling Fire Policy, Form 3 — is a property insurance policy written for a residential structure occupied by a paying tenant rather than the owner. The "DP" designation stands for Dwelling Policy; "Form 3" indicates the broadest version, covering the structure on an open-perils basis (meaning all causes of loss are covered unless specifically excluded).
The key distinction in a DP-3 is what it insures: the building structure, the landlord's liability exposure, and the lost rental income stream. It does not insure the tenant's belongings, and it does not include personal property coverage for the property owner — because the owner is not living there. A landlord package policy expands the DP-3 with additional endorsements, but the DP-3 is the core product most California landlords with 1–4 unit residential rentals start with.
A standard homeowners policy (HO-3) is a contract written with a specific assumption: the named insured lives in the home as their primary residence. The underwriting, pricing, and policy terms all reflect that assumption. When you move out and a paying tenant moves in, four things change simultaneously that the HO-3 was not designed to handle:
Most HO-3 policy forms include an occupancy clause that voids coverage — or creates a coverage exclusion — when the home is rented without carrier approval. Across our three California offices, we've seen cases where landlords discovered during a claim that their HO-3 denied coverage because the occupancy change was never disclosed. Of 2,080 new policies written through our offices in 2025, a consistent category was owners correcting this exact mistake — switching from HO-3 to DP-3 either proactively or, unfortunately, after a denied claim.
Moving out and renting your house? Your standard homeowners policy likely voids the moment a paying tenant moves in — you need to switch before they do.
The DP-3 covers three areas of risk that matter to a landlord:
1. The structure (open perils): Fire, smoke, windstorm, hail, lightning, vandalism, burst pipes, falling objects, aircraft, vehicles — all covered on an open-perils basis unless explicitly excluded. The dwelling coverage should be written at replacement cost, not actual cash value (ACV), so a total loss pays to rebuild rather than paying a depreciated amount. Most California lenders require replacement cost coverage.
2. Loss of rents: If a covered loss (fire, pipe burst, windstorm) makes the rental unit uninhabitable, loss of rents coverage replaces the monthly rent income during the period of repair or restoration. A typical policy provides loss of rents for 12 months. For a landlord whose mortgage payment depends on rental income, this is often the coverage that prevents a loss event from becoming a foreclosure event.
3. Landlord liability: Covers the landlord against claims from tenants or visitors who are injured on the property due to the landlord's negligence — a cracked step the landlord failed to repair, a faulty gas line in the landlord's control. This is distinct from tenant personal liability, which is the tenant's responsibility to insure. Landlord liability limits of $100,000–$300,000 are standard; an umbrella policy can extend that to $1 million or more.
The landlord's DP-3 does not pay for a tenant's belongings — not after a fire, not after a theft, not after water damage from a broken pipe. A tenant who loses everything in a fire with no renters insurance has no recovery for their personal property loss.
California law allows landlords to require renters insurance as a lease condition. Requiring it protects both parties: the tenant has a financial safety net for their belongings and personal liability, and the landlord reduces the risk that a tenant will sue the landlord for losses that renters insurance would have covered. A renters insurance policy typically costs less than $20 per month — far less than the friction of a tenant-landlord dispute after a loss.
For more on what renters insurance covers, see our guide: Renters Insurance vs Landlord Policy — What Each Covers.
| Coverage | HO-3 (Homeowners) | DP-1 (Dwelling Basic) | DP-3 (Dwelling Broad) | Landlord Package |
|---|---|---|---|---|
| Who buys it? | Owner who lives in the home | Landlord — low-cost option | Landlord — most common form | Landlord — full coverage bundle |
| Structure coverage | Open perils | Named perils only (fire, lightning, explosion, riot, aircraft, vehicles, smoke, windstorm, hail, volcanic eruption) | Open perils | Open perils + extended endorsements |
| Owner personal property | Yes — owner's belongings | Sometimes — landlord appliances only | Sometimes — landlord appliances only | Yes — landlord's fixtures and appliances |
| Tenant's belongings | No | No | No | No (tenants need renters insurance) |
| Landlord liability | No (personal liability only) | Optional add-on | Yes — included | Yes — higher limits available |
| Loss of rents | No (includes ALE for owner only) | Optional add-on | Yes — included | Yes — broader period |
| Tenant occupancy OK? | No — voids coverage | Yes | Yes | Yes |
| Required notice to switch | N/A — must cancel and replace | New policy needed | New policy needed | New policy needed |
Across our three California offices we quoted 7,116 policy terms in our most recent period, and landlord policies are individually underwritten — no flat rate table applies. These factors drive your premium:
Ready to switch your homeowners policy to a landlord policy? We serve landlords across California — call or get a quote online.
Get a Quote Call 209-670-1556Loss of rents coverage — sometimes called "fair rental value" coverage — replaces the gross rental income your property would have generated if a covered loss had not made it uninhabitable. It does not pay simply because a tenant stops paying rent or moves out voluntarily. The trigger is a covered physical loss (fire, water damage from burst pipes, windstorm, etc.) that renders the unit unlivable.
Standard DP-3 policies provide loss of rents for the period of restoration — the time required to repair the property to habitable condition — subject to a policy limit that is typically set at 20–30% of the dwelling coverage. If your home is insured for $400,000 and the loss of rents limit is 20%, you have $80,000 of loss of rents coverage. At $2,500/month gross rent, that covers 32 months of restoration — adequate for most losses. For complete total losses requiring full rebuilds in California's current construction environment, 24 months may be a more realistic planning figure given contractor backlogs.
In most cases, no. Most HO-3 policy forms include an occupancy clause that creates a coverage exclusion or voids the policy when the home is rented to tenants without prior carrier approval. Discovering this during a claim — after a fire or major loss — is a costly lesson. Notify your carrier or switch to a DP-3 before your tenant moves in.
A DP-3 is a dwelling fire policy written for non-owner-occupied residential property. It covers the structure on open-perils (same breadth as an HO-3), plus loss of rents and landlord liability. Unlike an HO-3, it does not cover the owner's personal property (because the owner is not living there) and does not cover the tenant's belongings. It is the standard policy form for California landlords with 1–4 unit properties.
No. A DP-3 or landlord package covers the building structure, loss of rental income, and the landlord's liability. The tenant's personal property — furniture, electronics, clothing — is not covered. Tenants need their own renters insurance. For what renters insurance covers, see our guide: Renters Insurance vs Landlord Policy.
Yes, but the product differs from a standard DP-3 for a house. The HOA master policy covers the exterior structure and common areas. Your landlord policy needs to cover the unit interior (walls-in), your landlord liability, and loss of rental income. Ask your broker specifically for a condo rental endorsement or landlord HO-6 form — a standard DP-3 written for a single-family house may not be the right form for a condominium unit.
¿Rentas tu casa en California? Preparamos esta misma guía en español — la diferencia entre el seguro de hogar y el seguro para arrendador, cuál necesitas, y cómo cambiar de póliza.
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