What is a key difference between DP-2 Broad form and DP-3 Special form coverage?

The key difference between DP-2 Broad form and DP-3 Special form coverage primarily lies in the types of covered perils related to the property. The correct answer focuses on the distinction in the extent of coverage provided for personal property and other aspects.

In a DP-2 policy, the coverage for dwellings and other structures is based on a named-perils approach, meaning that it only covers specific risks outlined in the policy. This includes losses due to certain events but may have limitations related to actions that could be considered external factors affecting property, such as damage caused by a neighbor's plumbing issues.

On the other hand, the DP-3 policy operates on an open-perils basis for the structure, meaning it covers all risks unless specifically excluded. Thus, it typically offers broader protection for dwelling and other structures, which indirectly affects the coverage scope regarding damage that could arise from neighboring properties.

Options regarding earthquake damage, theft coverage differences, and personal property coverage limits do not specifically highlight this named-perils versus open-perils distinction, and thus do not accurately represent the key differentiation that distinguishes these two forms of coverage. The DP-2 has more restrictions, while DP-3 includes a wider range of protection, making it important for a policyholder to