What Is Property / Dwelling Insurance?
Property coverage — sometimes called dwelling coverage on a DP-3 form, or building/contents on a commercial habitational form — pays to repair or rebuild your property after a covered loss. It also covers personal property on premises that belongs to you (furnishings, appliances, kitchenware), other structures on the lot (detached garages, sheds, docks), and certain related expenses like debris removal and ordinance/code upgrades. The Insurance Information Institute consistently flags that "renting out your home" through a platform changes the policy class — the dwelling form is the practical answer.
For properties listed on Airbnb or VRBO, the right form is almost always a DP-3 (a dwelling form designed for non-owner-occupied residential property — special-form, replacement cost available) or a commercial habitational policy (for multi-unit, mixed-use, or portfolio operators where the operating model has commercial-scale exposure). The right form depends on property count, gross rental income, structure type, and the carrier's appetite for the property profile.
Standard homeowners policies are written for owner-occupied residences. The moment your property is offered as a short-term rental on Airbnb, VRBO, or another platform, the use case changes, and most homeowners forms either exclude the commercial use entirely or contain a non-business endorsement that doesn't extend to STR operation. NAIC consumer guidance consistently treats short-term rental as a class change that calls for a different form — a claim during STR operation can be denied entirely, often paired with a non-renewal letter.
Replacement Cost vs. Actual Cash Value at Claim Time
Replacement cost value (RCV) pays what it costs to rebuild or replace today — current materials, current labor, current code. Actual cash value (ACV) pays the depreciated value of what was lost, factoring age and condition. The difference can be massive: a 25-year-old roof at ACV might pay 30 cents on the dollar; at RCV it pays full replacement.
For STR owners, RCV is almost always the right choice. The property's rental income depends on it being in service, and partial settlements at ACV often leave the owner choosing between an out-of-pocket gap or a cheaper rebuild that won't meet code. Imagine your beach house is hurricane-damaged and the local code requires upgraded wind-resistant materials on rebuild — without RCV combined with an Ordinance & Law endorsement, you cover that code gap yourself.
What to look for: confirm the policy declarations specify replacement cost on Coverage A (dwelling) and Coverage C (contents). Some policies default to ACV at certain age thresholds (often roofs after 15–20 years) — read the schedule of any partial-ACV endorsements on roofs or older mechanical systems. For properties in coastal or wildfire markets, pair RCV with Ordinance & Law to close the gap between rebuild cost and current code.
