What is a common characteristic of the DP-1 policy?

The DP-1 policy, also known as the Dwelling Property 1 policy, is a basic form of property insurance designed for dwellings that typically do not meet the criteria for standard homeowners insurance. A defining characteristic of the DP-1 policy is that it provides coverage on a named peril basis. This means that it only covers specific risks that are explicitly listed in the policy. Common named perils in the DP-1 policy include fire, lightning, and internal explosion, among others.

While other policies like the DP-2 and DP-3 offer broader, more comprehensive coverage, the DP-1's focus on named perils influences the types of claims that can be filed and the overall risk management for homeowners. This targeted approach is why the DP-1 policy is particularly suited for properties with lower value or those in less hazard-prone areas. The clarity of specified perils allows policyholders to understand exactly what is and isn’t covered, aiding in better risk assessment and management for their dwellings.