For a DP-2 policy, which statement is correct?

In a DP-2 policy, which refers to a Dwelling Property form used primarily for rental properties or seasonal dwellings, the coverage provided for the building and its contents is classified as named peril coverage. This means that the policy specifically lists the perils that are covered, rather than providing open peril coverage, which would cover any peril not specifically excluded.

The named perils typically covered under a DP-2 policy include risks such as fire, lightning, windstorm, hail, explosion, vandalism, and more. Coverage for contents is also included, but it is likewise subject to the named perils outlined within the policy. This distinction is crucial for understanding how protection is applied to both the structure and its contents in the context of the policy, reinforcing the idea that both building and personal property must be explicitly mentioned to be covered.

The other options do not accurately reflect the characteristics of a DP-2 policy, as they either limit coverage incorrectly, misstate the terms, or suggest exclusions that do not align with the general framework of named peril coverage. Understanding this foundational aspect of dwelling property policies helps agents accurately inform their clients about the level of coverage they can expect.